Nuvoco Vistas Corporation Limited analyst Q&A

Thank you very much. We will now begin the question-and-answer session. We’ll take our first question from the line of Siddharth Mehrotra from Axis Capital. Please go ahead.

Hi…

Mr. Mehrotra, I am sorry sir. Can you please repeat your question again?

Can you hear me now. Am I audible?

Perfect. So, just wanted to check, since our Surat plant is now online…

I can't hear you -- don’t put on the speaker phone. Please, you got to take the handset and talk because you are very feasible.

Is it better now. So, just wanted to check, si nce our Surat plant is now online, what sort of volume are we looking at for this year? And secondly, given the fact that our clinker capacities are yet to come online, what will be the source of clinker for this capacity?

Okay. If you remember in all my previous calls, we had very clearly explained the sequence of startup with Surat coming in Q2, Q3 this year, and then the clinker capacity in Kutch comes in Q3, Q4 this year, and then the WHR and the grinding unit later as well as the siding. So, right from the beginning, it was clear that when we start Surat, we'll have to get clinker from elsewhere and not from Kutch. So, and currently before Vadraj started, we were anyway selling close to a million tons in Gujarat which came from our Chittorgarh and Nimbol plants. So, what's going to happen is the 1 million ton anyway will come from Chittorgarh and Nimbol in the balance period and also till such time even it will go all the way up to about 1.4, 1.5 million tons in annual basis from Chittorgarh and Nimbol plants. The balance, our target is when we complete Q4 this year, our sale in Gujarat will be anywhere close to about 2 million tons as an annual sale. So basically, it will be about 1.6, 1.7 lakh tons per month in the Q4 of this year, which should mean it will be about 30,000, 40,000 50,000 tons more than the average run rate which we are selling currently in Gujarat. For that, we need clinker and those clinker will come from our Chhattisgarh cluster and that's how even the first dispatches have made through clinker which is sourced from Chhattisgarh cluster. I can't move clinker from Chittorgarh into Surat because that clinker is needed for the North market. But we are also working at some of the options like bartering with other companies whereas we can give some clinker in East and also pick up clinker from North, which will be much more economical than moving our own clinker from Chhattisgarh cluster into Surat. So, net-net, at the initial till such time Kutch comes on stream, which will be -- earliest will be January this year, and maybe give or take one or two months, so by start of fiscal FY28, we'll have Kutch clinker coming into Surat. So for the balance currently 1.5 million ton sale and Q4 2 million ton sale, for the incremental sale, clinker will come from Chhattisgarh cluster.

Understood, sir. So, my understanding is that on an incremental basis, you will perhaps do close to a million tons extra in Gujarat. Is that correct?

Currently, we're doing 1.3 million, 1.4 million. So, balance 0.6 million tons. We will have extra sale in Gujarat, since we have launched the product and then covering most of the Gujarat now. Q4 will sell 2 million tons annualised rates. So, for the incremental volume of cement, clinker will come from Chhattisgarh.

Got it, sir. That's very clear. Secondly, sir, just wanted to check, our East debottlenecking plants seem to be sort of facing some delays. From what I recall, last time we had CTO for two of our plants around 2 MTPA capacity, but there seems to be no update regarding that. So, anything you want to add to that?

No, we had debottlenecking happening in Jajpur, Jojobera, Panagarh, and Arasmeta. So, last time in the call, I had said we have almost got our CTO done for our Panagarh and Jojobera facility. I think those two plants are almost done. And Jajpur there's something called an NIPL certificate which you have to get because wh en capacity increases less than 50% of the installed capacity, then you don't go through the normal EC route, so you get through NIPL route. So there, I think the Jajpur thing is currently underway. Arasmeta, the technical design is completed, we are more or less at the commercial conversations about ball mill procurement and rest of the civil ordering is being done. So, by the time we complete this fiscal, we should be ready on all four fronts. Suffice to say that these capacities which we were installing, commissioning and expanding in East was not needed to sell products for the fiscal FY27. It will be needed in fiscal FY28 only because with the current sale plan and the current ambition for the company in fiscal FY27, we have adequate capacity in all our grinding stations. Just that we need more flexibility for state-wi se capacity and that's the reason why we are not kind of pursuing at a rigorous pace for these. But by the end of this fiscal '27, three plants will be fully commissioned and ready for volumes for FY28. Arasmeta should be on by end of this fiscal '27 and will be available in Q1 FY28. So, those plants are also on stream. So, just want to assure all of you that there is no delay because the modification involved are very mino r modification, it's not major modification. Its overall capex cost was pretty less for all these four plants. Just that the timing and the pacing is there. Right now, we are not hard-pressed for capacity, so I'm not kind of pursuing it at a rigor. Two plants CTO are almost done, the other two plants will be done in the next six to eight months.

Understood, sir. Thank you.

Thank you. We'll take our next question from the line of Amit Murarka from Axis Capital. Please go ahead.

Yes. Hi. Good evening and thanks for the opportunity. So, just wanted to understand the pricing and cost a bit better. We see that you ha d a quite a strong pricing improvement in the quarter, but at the same time, like there was some moderation in the Y-o-Y growth, which is roughly 4%. So, wanted to understand, like, was there also a change in mix between trade, non-trade which happened in the quarter, or is the pricing gain attributable purely to market- level price hikes?

Sorry, I was on mute. So, thank you for the question. Last time when we met was in the conference call in April and that was when the en tire Middle East was raging and then one of the big things which was happening in the industry as well as for ourselves was we had to do a price correction to defray the cost increases. So, which overall if you look at the April month and then subsequently the full quarter, for the quarter we had a trade price which increased more but then overall it got tempered, but for a full quarter level, we got a INR10 per bag increase in trade and INR20 per bag increase in non- trade in the quarter for East. And in North again, we got about INR10 per bag in trade and about INR10, INR12 in non- trade. So, throughout the quarter if you look, we had a price increase of close to about INR320 in the entire quarter. But the one more unique thing is when we went to the end of the quarter, we exited June quarter with price increase more than the average for the quarter and that kind of stayed good as we started the month of July. I will also tr y and give a detailed breakup of the realization and the cost impact. Overall, if you see our realization has gone up by close to about INR320 Q1 versus Q4. That came mostly through three reasons: one was the NODT increase, second was the geo-mix which we played in key markets of Chhattisga rh, Rajasthan, Western MP, and Jharkhand, and also the price increase in the last 15 days of March which kind of gave a fillip to the first month of the quarter. Hence, we got a realization increase of INR320. But this INR320 got kind of set off by cost inflation which I mentioned during the previous call. The first cost increase happened for the quarter Q1 versus Q4. Power and fuel went up by approximately INR40 per ton. Raw material cost also went up close to about INR35, INR40 per ton. Packing bags I mentioned about the granule issues as well as the capacity shortage and the jute issue from Bangladesh which overall increased th e packing bag cost. That also increased by close to INR50 per ton. And the volume impact from Q4 to Q1 resulted in a little bit of a fixed cost deleverage of close to INR30, INR40. And other one which also impacted the quarter one was the distribution cost, freight cost for the company like-to-like from Q4 to Q1 went by close to INR50, largely coming out of suboptimal movement because of diesel shortage and truck shortage in certain states and also due to the fact that the railways stopped supp lying adequate number of rakes due to coal movement and we resulted moving clinker by road. Net-net, realization happened INR320 and the co st increase was close to about INR230, which reflects in the EBITDA impact of close to INR90. That's been the story of Q1 when compared to Q4.

Got it and thanks for the elaborate answer on that one. But pricing just to understand better, I think you mentioned that your realization improvement was better than the market, that was a function of geo-mix optimization as well as in more trade in the mix or how is it?

Three things: one is obviously price increase happened, that's something with that is the biggest lever is the price increase close to abou t INR10 in trade and about INR15 in non-trade. So, that kind of the biggest impact on the overall realization improvement. Second one is obviously we are a premium player with increased share in Concreto Uno and Duraguard Microfiber. I'm happy to report to all of you that both these brands have become a 1 million ton brand now. So, we are very happy that in a very short span of time, these two brands have now become an annualized 1 million ton sale added to Concreto which is close to about 3.9 million tons. So, we safely say that with 4 million tons of Concreto, 1 million of Microfiber, and 1 million of Uno, we are close to about 5 million tons of premium and super-premium products. So, that's the second reason. The third one was the impact of positive impact due to increased sales in Chhattisgarh, Jharkhand, Rajasthan, and Western MP, which are high realization markets for us. So, three reasons: one is price, second is premium, third geo-mix.

Sure, sure. Thanks a lot. I'll come back in the queue.

Thank you. We'll take our next question from the line of Satyadeep Jain from Ambit Capital. Please go ahead.

Hi. thank you. So, first, wanted to understand, so you discussed all the line items on the cost side, where the fuel costs have been, what kind of additional inflation do you see in 2Q and would that be the peak and you start seeing moderation? Just trying to understand fuel inventory and where that is. And also, on the packaging cost and all are?

Satyadeep, just briefly, are you asking about the fuel bit for the company specifically?

No, you said there has been inflation of 1.53...

Can you speak a little bit louder? So, I'm missing few words in your question, please.

Yes, yes. So, you mentioned the fuel consumption cost was 1.53. Where the fuel costs have trended in the last few months? Where do you see fuel and packaging and all these costs? Has there been improvement on the rail evacuation? Just trying to understand what kind of impact would you see in 2Q?

Yes, yes. I'll be able to give you -- I'll give you the reasons. So, I'll have to split the whole bit into East operations of Nuvoco and North operations of Nuvoco. North operations of Nuvoco is largely petcoke driven with 23%, 24% of AFR in both the Chittorgarh and Nimbol facility. Whereas on East operations, we have close to about 30% of petcoke and balance is domestic open market coal and linkage coal and very small amount of AFR which is to the tune of about maximum Risda 10% or overall range of about 4%, 5%. That's how we've been operating till this crisis happened. But every crisis is an opportunity for us to look into the operations and revisit the entire assumptions. So, what we did in Q1 was three things we did. One was question the very principle of using petcoke and hence our teams did a wonderful job by curtailing the use of petcoke in North from excess of 50% to about 42% number. And for the first time, we could move domestic op en market coal from Chhattisgarh cluster to Chittorgarh plant and also from Varanasi depot to a Nimbol plant. Even though the normal rate we couldn't have used this coal. But because of the heightened value price of petcoke, these two became viable and hence we kind of moved material from Varanasi depot to Nimbol and Chhattisgarh Nagpur and Nagpur to a Chittorgarh and that's how the North petcoke consumption reduced from over 50% to about 40%. So, that's about the North. When we came to East, we have the Risda fact ory, Sonadih and Arasmeta. In all these three plants, we had petcoke consumption excess of about 30% was the number. And during this quarter, we were lucky enough to contract coal from Eastern Coll ieries which is called Sonepur Bazari, which whose ash content is much better than the other linkage coal ash content. I think our purchase team did a wonderful job. So, by using this specific variety of coal which comes from West Bengal, whose ash percentage is much lower than the Chhattisgarh coal, and the number two thing which we did was we started adding a little bit of sweetener in our Risda factory. Sweetener is again a better quality limestone and so we added started using better quality limestone whose CaO and LSF is much better in our Risda kiln and also in our Sonadih from ML1 line. By increasing sweetener usage, increasing the Sonepur Bazari coal, we successfully brought down the petcoke consumption during the quarter. So much so in Arasmeta as we speak, we are operating at zero petcoke consumption and in Risda factory from close to about 37% the petcoke consumption we've already come to about 25% petcoke consumption because the cost increas e due to sweetener is much lower than the cost increase cost reduction coming out of petcoke. So, this was the big agenda which we drove in our Chhattisgarh cluster and North was getting linkage coal domestic open market coal to the No rth factory. All these kind of contributed to the overall fuel cost being capped at INR1.52 per million cal.

And sir, how do you look at the trajectory given you may have consumed petcoke which was lower cost and the trajectory kept moving up? So, mainly on packaging and fuel cost and also railway, has there been improvement in rake availability? Just trying to understand what happened in 1Q, just trying to understand how do you look at the trajectory in 2Q, 3Q?

Okay. So, looking at what we face in going forwar d in quarter two, first would be fuel. I think we have adequate inventory of petcoke for the entire quarter at similar cost level, so my fuel inflation is not likely to go up by big number. I won't be exactly able to tell whether it will be 1.52 or 1.55, but it's not going to spoil my game in quarter two. That's the first one. The second thing is about packaging bags. I think packaging bags has peaked in Q4 and Q1 with higher demand and West Asia crisis also fuel the granule price. I think granule prices have started coming down and hence the demand also will come down due to monsoon. So, bag availability should not be a problem. The increase in bag which happened close to INR50 in Q1 versus Q4, I expect cooling off of that price by around INR20, INR25 in Q2 versus Q1. So, bag price will come down. Fuel will more or less kind of get capped. And the third one which kind of hit us negative was the non- availability of rakes and we ended up moving clinker by road. Here again, after 15th of July, once the monsoon sets in, I think the coal fields will get flooded and it will not be possible for coal to move and also the overall power demand in the country will come down with monsoon setting in. Hence, coal which will be shipped by the government's mandate of moving coal from coal fields to the power plants will also taper down. And already in the last one week, we typically get about four rakes per day for clinker movement and it had kind of come down to 3.2, 3.3 in quarter one. We've already started getting in the last one week four rakes per day and going forward from now till the next two to three months, it will be certainly four rakes per day and we'll stop moving clinker in our grinding unit. And last but not the least, the lean season disc ount will also kick in from 1st of August and that's a welcome sign. And this time the Government of India has said even for clinker movement there is going to be lean season discount, unlike only for cement in the past. So, we'll get a benefit of railway freight which will come down, availability of rakes will eliminate our movement of clinker by road, and then packaging bags will kind of cool down, fuel cost will be almost in the same place. So , technically we are looking at cost lines more or less same. The only thing which will be adverse in Q2 when compared to Q1 will be the power and fuel cost. Fuel remains the same, power cost will go up by close to about INR40, INR50 per ton simply because this is a shutdown time when we have to have two of our kilns are going down in the next two months and also all our VRMs and ball mills will also go for shutdown in the next two, three months. So, there will be an increase in power cost, fuel co st will be kind of capped. Net-net, there will be an increase in power and fuel cost by some INR30, INR40 per ton.

Satyadeep, I request you to join back the queue, please, as we have participants waiting for their turn.

Sure.

Thank you. We'll take our next question from the line of Tejas Pradhan from Citigroup. Please go ahead.

Yes. Hi, sir. Was there any change in the lead distance this quarter versus last quarter?

Very insignificant. I think last quarter we were close to about 325 kms, right now it's about 327, 328. Not much of difference in lead distance. Just that the rail coefficient was 62 road and 38 rail in Q4, it's about 64 and 36 in Q1.

Okay, okay. Sure. And on the premium product share and share of trade sales for the quarter?

Okay. So, premium we are at about Q1 versus Q4 was peaked at 44%. This quarter premium is 42%. Trade mix continues to be same 75, 75, so not much of change in trade mix.

Okay. Understood. And lastly on the net debt number for the quarter?

Yes. Net debt we ended the quarter with INR4,5 95 crores and correspo nding quarter last year was 5,274. A good INR600 crores reduction from last June '25 to June '26.

Sure, sure. Thanks. Thanks.

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

Hi. Thank you, sir. Sir, just to get a couple of things clarity. Sir, you mentioned that the exit June cement prices or the realization is higher versus the 1Q FY27 average. Can you quantify will it be a kind of a INR5, INR10 per bag higher?

We reported quarter one versus quarter four was close to INR320 realization improvement. So which would mean exit June is slightly lower than the average June because the price increase happened at the beginning of the quarter. However, as we start the quarter, one of the things as seen in this industry for few years now, and the welcome sign is there's no price drop in the first 14 days of July, which is a welcome sign. I think we are holding on to our prices and normally monsoon there's always a drop in price, but the first two weeks of the month is steady and holding on to all the prices which we had in the month of June. So, even though we still have not taken a price increase, but I think cost holding, prices holding on first 14 days of July, I think it's something which is unique for this year. It's a welcome sign. But still we will not wait for an opportunity. As of now, costs are kind of stable, but certainly I think if the costs were to go Southwards, I will take price Northwards.

Okay. And now, sir, given that the once this Sura t we have already started and let's say in Q3 once we start the commercial production for the clinker at the Kutch level, maybe in the full- fledged in the Q4, how do we kind of see so on that part if we have to see on profitability front, will it be a much, much lower versus currently what we are having a profitability or how one can look at or if it is lower by in how many qu arters one can see that profitability of this Kutch including the Surat grinding would be at par with the company average?

Look, I guess whenever you expand in any region with huge capacity, any cement player who has expanded capacity in a particular region or in a particular state, something, if you have to kind of get volumes going in the as quickly as possible because having put so much of capex, I need volumes very quickly. I need to get back my investment as fast as possible. So, we will play an aggressive way to sell our product. But one thing is for sure, my positioning as an A-group will never reduce. So, our product Duraguard, even in the markets where we operate in Rajasthan, Western UP, Western MP, Western UP, Haryana, Delhi, even in Gujarat, I am a A-group player and I am far ahead of any of those other B-group players. There are one or one guy, one or two guys who are almost equal or slightly ahead of us. So, that's something which positioning is going to be very, very keen for us. And also in Gujarat, non-trade realization contribution is also quite go od with OPC and almost equal to rest of the product. So, Gujarat contribution will be quite good. But on the initial stages for me to establish the market, I will have to be aggressive. But what is the positive Nuvoco has? Nuvoco is not a new entrant in Gujarat. Nuvoco has been in Gujarat for the last 2 years and we already sell close to a million and half already. Currently, we're selling 1.3, 1.4 million, whose pricing is almost equal to the big players in Gujarat. So, when I'm going to increase volume, I'm not going to dilute price. My job is to get more franchisee dealers and expand the dealer network. And I think we have personally met hundreds of dealers and our teams have connected with 300, 400 dealers in the last 5 to 6 months. Our market development is at full swing. So, we're pretty confident that the people, the dealer fraternity in Gujarat very keen to have Nuvoco in places where we are currently not there. Before launch of Gujarat, we were present in Baroda, we were present in Godhra, we were present in Surat, we were present in Ahmedabad, Banaskantha, all these places were there. But over a period of past 6 months, we also launched our product in Rajkot, Saurashtra and Porbandar, those areas. And our pricing has been very good in those products and my contribution margin and our realization is not less than any other major competitor in Gujarat. So, net-net, I'm fairly confident that we will not dilute prices to push volumes in Gujarat. Of course, you'll have to do some trade schemes to get people working for us, but in general our positioning will be good, our premiumization will continue to be there, we'll focus on Microfiber. So, all this will offset the potential decrease in EBITDA per ton because my costs will be high in the first year. But that's the nature of the game. So, overall and I don't think we can judge the performance by the first year of launch into Gujarat. But our modelling very clearly says in Year 2 and Year 3, EBITDA per ton in Gujarat will be equal to EBITDA per ton of rest of North India.

Okay. Great. Yes. Can I ask one more?

Thank you, Shravan. I request you to join back the queue, please. Thank you. We'll take our next question from the line of Pinakin Parekh from HSBC. Please go ahead.

Yes. Thank you very much. My first question is.

Pinakin, can you use your handset mode, please? Your audio is not very clear.

Yes. Is this better?

I am sorry you are sounding muffled.

Hi, Pinakin. Slightly feeble. If you can speak a little bit louder, please.

Yes. Sure. So, if I look at the Nuvoco EBITDA per ton over the last 6 years it has ranged between INR700 to INR900 per ton, but for the last two quarters, we are in range towards INR1,000 and higher. If we take a step back and look at.

Pinakin, I'm sorry, you're sounding muffled.

Can't hear you, Pinakin. I think other than the first sentence, not audible.

Okay. Let me just -- let me rejoin the queue.

It is a little bit better now. Just go ahead.

Yes. So, if I look at the EBITDA per ton, do you see the current EBITDA profitability. We know seasonally second quarter is weak, but sustained over the next few quarters, can Nuvoco deliver over INR1,000 a ton? Ultimately, it's dependent on pricing, but how do you see pricing therefore evolve given the -- what was commented by other industry players in May of holding back capacity expansions?

Pinakin, I guess I will not be able to give a guidance on what will be the EBITDA per ton going forward. I will -- that's not be appropriat e. But certainly, I think what are the things which work for us is our geo-mix, premiumi zation, our trade non-trade and our blended cement. So, those are the strengths of Nuvoco and the positioning of Nuvoco which will be there. But when you compare with what was the past period and what do I see now and future, I think the past period last FY23-24-25 had very specific events in the industry which kind of impacted the overall pricing in the industry. And if you could see, I think all of you observe the market and we also observe the market. If you see certainly in the last three, four, five quarters, I think profitability is very, very important and it's important for us and I'm sure for everybody else in the industry. And hence, I think pricing is relatively stable in the last 1, 1.5 years. And I also see going forward pricing is going to be pretty stable. And I'm sure all of you heard the investors calls for other companies. I'm not going to comment on that, but I guess all of us realize that there will be capacity expansion, but capacity expansion is not going to be at the breakneck speed. So, since capacity expansion is not going to be at a breakneck speed. And it will be in a sensible pace and also with the internal levers of our company, I believe price will be stable going forward. And with the stable price and the positioning of our company in terms of product, portfolio, market, geo-mix, I think we will be better off in managing improving the profitability levels in the coming quarters.

Thank you, sir. That is very helpful. Just moving on to my second question. The more accepted norm with investors is that North is the most profitable market in the country and East is under pressure and for the last 5 years, East was impacted by more supply. Now, this year there is supply, but we don't see more capacity additions being announced in East. Do you see or in your view what will take East pricing structurally higher over the next couple of years? What will it require for East to close the gap with North?

I think from the capacity expansion announcements which have been placed by all player what you call informed by all the major players, ther e are not many clinker units which are going to come in the next 3 years. So, I think a couple of them which are coming and those couple of them are not going to disturb. Clinker used to be about 40, 42 million ton capacity, that went to close to about 60 million ton and that was the period of last 3, 4 years when all the capacities bunched up around the same time and did not give elbow room for pricing to improve. But that is done and from the announcements, all of us know that in the next 3 years there are going to be max three and at the best two. And even if someone were to announce now, it's going to take anywhere between FY29 and thereabouts. And with market growing at 7%-8% conservatively, very soon in the next 18 to 24 months, capacity utilization of the entire East w ill go to again cross 80%. And if it were to go to 80%, pricing will become stronger and then obviously profitability in East also will improve. That's the way I am looking at. So, it's -- I wouldn't be able to put a exact number whether profitability in East will be equal to profitability in North, but I know our company, what kind of profitability we get in the region. So, I'm fairly confident the profitability which we are getting in East will be -- is good now and will continue to be good going forward.

Got it. This is very helpful. Thank you very much, sir.

We'll take our next question from the line of Jashandeep Singh Chadha from Nomura. Please go ahead.

Yes. Hi. Thank you for the opportunity. And congratulations on a very good set of numbers despite challenging environment. So, my first question is regarding your capex guidance which you gave last quarter, INR900 crores and INR960 crores for FY27, '28. Is there any change in that? And my second question will be on the, your -- how are you seeing, first quarter has been completed and second quarter is going on, so how are you seeing demand for FY27 because last quarter a lot of your peers painted a very bearish picture on in terms of demand for this year. So, how are you evaluating demand this year?

Okay. Capex first. I guess we had communicated in the last call that the outlook for FY27 capex was INR900 crores. It continues to be INR900 crores. In Q1, we have spent close to about INR370 crores. The balance money will be spent in the next 3 quarters. So, we're more or less on course to complete what we intended to do this year. And next year again with the expansion of Vadraj going to be completed and then the Sachana bulk terminal which got announced and routine capex in the plants, I'm looking at close to anywhere between INR950 crores to INR1,000 cror es number. So, that's the range as I look at now. So, this year INR900 crores, next year INR950 crores to INR1,000 crores, give or take INR10 crores, INR20 crores here and there. That's going to be the outlook. As regards the other point regarding the cement demand, I think demand in Q1 was still I think a little bit more than we delivered because we could have delivered more in Q1 but for the rake availability, we lost some production sale in April, May, June. I could have easily done close to about 2 lakh tons more, which was off because the demand was decent. And just because we couldn't get ra kes and then diesel sh ortage and Chhattisgarh truck would not move to Maharashtra and MP because there was no return load and we had serious bunching of rakes in Northeast as well as in Bengal. So, it got overall sales growth could have been more, it should have been more for us, did not happen the way I thought. But market demand I thought was anywhere close to 7%, 7.5% even in Q1. Going forward also I'm looking at a market demand around the same number. Just that the government change in Bengal has happened, I think it will take maybe a quarter or so for the overall schemes to be announced on the ground and effect on the ground to happens. But certainly, Jharkhand is doing well, Odisha we have come back with a good after many quarters in Odisha we did very well in Q1. Bihar continues to be a strong citadel for us. So, I guess I'm looking at a demand anywhere between 7%-8% in the next 3 quarters.

Yes. Thank you for that, sir. Sir, my second question is regarding Gujarat profitability. I understand and you've already given an elaborate answer on that that from the second and third quarter, the Gujarat, profitability will be in line with rest of Nuvoco, but I still want to, you know, focus on Surat GU because even when the Kutch clinker unit comes, I think Chittorgarh is still nearer to Surat plant than the Kutch unit. So, how will the profitability, is it fair to assume that Kutch will be more profitable in terms of EBITDA per ton than Surat unit or is the company, working on something to improve the profitability of the Surat? Just wanted you to focus on that?

So, technically if you see the reason why I won't compare performance from other companies which have put a plant in Kutch, but that's one of the hypotheses we thought and that's the reason why we decided to put a grinding unit in Kutch. Without a grinding unit and only a clinker unit, moving 3.5, 4 million ton of clinker by sea route was almost a difficult proposition for anybody who tried doing it. The original assumption was that at that time , but I guess that's probably a very difficult assumption one made. And that's the reason once we kind of got into the act and we very early in the acquisition and reconstruction phase, we decided that to make this entire model work well, we need three ways to make this model successful. The first way is to find to get clinker through maritime route into Hazira Port and into Surat. And certainly, two, three months of the year when monsoon happens, clinker cannot be moved. Hence, we needed rake. Fortunately for us, railways line was coming till Vayor and I think very within three, four months, that program of railways came into being and we immediately latched on, we modified our project plan and we decided to go for the railway line. So, once we had the railway line and then also the jetty movement, so our clinker movement via marine route or through the rake route is a certainty. Of course, moving clinker through jetty route, marine route is far cheaper than movi ng by rail. That's clear. Second thing we did was if we had to move clinker all the way because Gujarat market is a lot OPC market. So, if I were to kind of move clinker to Surat, grind in Surat, whereas the market is also going to be in Ahmedabad and rest of the place, I'll do reverse movement. Hence, the entire idea of setting up a GU happened in Kutch and also with the incentive scheme available in Gujarat, it became economically sensible for us to put a full-fledged GU there. So, I will make OPC and or PPC and sell in Kutch and rest of the Morbi-Kandla area from our Kutch plant. The third idea which we implemen ted is the Sachana bulk terminal. With the railway’s BCFC wagon movement which we will al so invest there, we're working on whether lease or purchase, which had a option that on the return freight, return was zero freight, it was only forward freight. And we decided that instead of taking clinker, we'd much rather grind the clinker and take OPC to Sachana and in Sachana we'll move from rake bulker to road bulker. And once we do debulk into road, then Sachana is only 40-odd kilometers from Ahmedabad, the core market. So, I would do Mehsana, Ahmedabad and rest of the region, I'll do bulker movement from our Sachana. Sachana unit also has a bag packing facility. So, in case I have to sell cement in bag, I also will sell cement by bag from our Sachana. So, technically speaking, Kutch plant GU will help me sell in Kutch and part of Saurashtra up to Morbi. Then I come to Sachana which will he lp me sell to Rajkot and all the way to Ahmedabad. And then Surat will help me sell in Surat going all the way to Vapi and even Mumbai and also upwards to Godhra. And in the border area of Rajasthan, I'll get cement from Chittorgarh. That's the overall plan which we have envisaged and it's a far less riskier than what others had attempted in the past.

Understood, sir. Thanks so much.

Thank you. We have a next question from the line of Rajesh Ravi from HDFC Securities. Please go ahead.

Yes. Hi. Good evening, sir. Am I audible?

Yes, Rajesh. You're audible.

Yes. Great, sir. On great set of numbers. And sir, my question pertains to guidance for FY27. Per se, if you look at -- what I understand in Q2, your variable cost is broadly will, the fall in packing cost will offset the power cost increase due to the plant shutdowns. So, mostly your variable cost seems to be stable quarter-on-quarter in Q2 and there would be off-lay maintenance cost which will have some drag on the cost line item. So, given that if price is going to remain stable, would that mean we will have another strong quarter in terms of margins upward of 900 or closer to 900 sort of margin, assuming prices remain stable where they are?

That's very difficult, Rajesh, to give that information, but I wish the price of 15 days is stable. I think price hopefully is going to be stable and also kind of the cost inflation with the kind of targets which I have, I'm looking at anyway looking at about INR100-odd increase in cost line in Q2 versus Q1. That's the way I'm looking at right now. It's too early in the day for me to kind of put a finger on it, but as I see with the fuel cost with the inventories which I have and the packing cost which has happened 15 days and the price holding back and shutdown plants which we have, this is the kind of number we are working on for Q2.

So, total cost you're looking at INR100 inflation Q-on-Q and then obviously the pricing will decide your margins, right?

Sure, sure.

Some uncertainties will creep in the quarter.

And sir, subsequently because Q2 you're not seeing an impact of fuel price--large impact of fuel price increases, but in subsequent quarters, given the current spot prices will only the--you know, the new purchases thereon will be flowing into a lower cost, but purchases which you have ordered in month of say May, June, early July, they would be at elevated cost. Would that further increase your cost number in Q3 in terms of fuel cost?

Yes, it's possible because technica lly, Q3, I think the little bit higher cost inventories will come. But some of the things which we have done, I would--I won't be able to tell on the call. I think our purchase team has been very smart to find out what consignments at what price to book and what price not to book. So, but suffice to say that there is going to be impact, but it is not going to kind of change the overall game big time unless and until here and now because pet coke went all the way to INR2.56 per million cal. So, we refused to book at that prices. We kind of curtailed booking at much lower at 2.05 or 2.15 was the number which we booked. So, this is helping us. But if the entire price were to continue this way for a month or two months, things have started cooling down, but if it were to continue, I guess everybody can guess in for what will happen.

Understood. And sir, any volume guidance for FY27 you're looking at?

Rajesh, I request you to join back the queue, please, as we have participants waiting for their turn.

I’ll just complete this question and move on. Any volume guidance for FY27, sir, you’re looking at?

I think our target is to get close to about 7%-8% of market growth. So, that we would go for it with incremental volume anyway will come for us in Gujarat. So, obviously North we are very strong, and Gujarat volume will always add to the overall volume growth for the company. So, which I'm really targeting mid 7%-8% kind of a number.

Great, sir. That's all from my end. Thank you. We'll come back. Thank you.

Thank you. We'll take our next question from the line of Jyoti Gupta from Ashika Institutional Equities. Please go ahead.

Good evening, sir. I'll go back to my--to the same question in terms of realization. If I understand the revenue breakup is 60% east and 40% north, correct me if I'm wrong. So, despite moderation in costs, which apparently is through the use of higher use of coal and less use of pet coke. Has the price, I mean, how has the price realizations improved in North and East, and should that be the case for the entire industry? And I mean, or is there some spillover from th e fourth quarter into the first quarter, because realization INR240 per bag -- if per ton is slightly, I'm not able to understand this, you know, number. Maybe if you can explain to me again, I'll be able to understand that better.

Yes. I kind of explained that in the Q-o-Q, which is Q4 versus Q1. Through the quarter in north I added INR10 per bag price increase in trade and close to about anywhere between INR10 to INR15, INR12-INR13 per bag on non-tr ade. So, that's where the impact of INR10 is certainly INR200 per ton and then INR15 it is also INR300 per ton. Our proportion of trade and non-trade in Northern region is more than the proportion of trade and non-trade in East. So, to that extent, the weighted average price came to around mid in between 200 and 300. That's how we--that's what I tried to explain. But mathematically, if I were to go to 40% in north and 60% in east, and so I don't think at this point of time I'll be able to give exactly how much we benefited in north and how much we benefited in east.

And you never--sorry, and there were no constraints in terms of availability of bag and the cost of bag did not impact your cost at all?

I'm sorry, can you repeat the last sentence, please?

I said the impact of unavailability of bags, which was also a concern in the third quarter-- fourth quarter of FY26?

Yes. I we had serious issues of bag certainly in February, March and then also in April, May. The problem in Q4 was huge demand, problem in Q1 is not exactly demand but also due to the fact that granule prices went up. So, we are a company which uses lot of LPP bags, not LTP bags. So, since we are indexed on LPP bags, LPP bag there the impact was much more. But as we came to the month of June and now July, we had to give lot of incentives to cover capacities, but that's kind of going away now. So, Q2 certainly the incentives will go away because overall demand for the industry itself will come down and all the bag manufacturers will won't be in a position to extract price increase.

Okay. So, because eventually the impact of anything does not seem to be reflecting in the cost. Very well-managed costs. Great set of numbers. Thank you so much.

Thank you.

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

Yes. Sir, what was our blended share for 1Q? And you have mentioned in terms of the plant- level pet coke share, but at a company level fo r 1Q, what was the pet coke share and the coal share?

Sir, I was asking more from a fuel mix perspective. So, what was the pet coke as a percentage?

Okay, okay. I'm sorry. I thought you're asking million cal. Let me just give you the data. Petcoke was 4Q was 37%, 1Q 27%. 10% reduction in the overall mix.

And coal share was how much in 1Q?

Coal was 53% in 4Q and 67% in 1Q. AFR was 10% in 4Q and 6% in 1Q.

Okay. And blended cement share in 1Q was 83%?

Yes. Blending ratio is 82%. Give or take decimal 82.

Okay.

Thank you.

Okay. And yes, just the one more, sir. Just to get a--this Jojobera and Panagarh where we got the CTO. So, both these 1-1 million ton will be starting in Q2 or a Q3?

Look, it is available for me. I--right now in monsoon period obviously demand will be there. So, this number will be useful for me in Q4 when my numbers will go up. I need to dispatch close to about 20,000 tons per day in Jojobera. So, I have to do 20,000 tons per day in Jojobera, this 1 million ton will help me, headroom will help me. Similarly, in Panagarh, we used to do about 7,000-odd tons per day. Our target is to go to 8,500 tons per day. So, these are the numbers which will come into play in Q4 and this increase in capacity in Jojobera and Panagarh will help me get this consistent 8,500 per day and 20,500 per day.

Okay, okay. Thank you, sir.

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

Thank you for your questions and active particip ation today. We hope the discussion proved insightful and the IR team remains available for any post-call clarifications. As we come to the end, I want to leave you with a few thoughts. Our growth journey remains on track. 2 million tons Surat grinding unit inaugurated ahead of schedule along with the upcoming Kutch plant expected to be operational in the near term w ill significantly enhance our presence across Western India. At the same time, this will help us free up ca pacity at our Rajasthan plant, enabling us to further strengthen our position in the Northern markets. We'll continue to focus on delivering growth and internal levers including geo-mix optimization, cost optimization, and premiumization, which will underpin long-term value creation for our shareholders. Thank you once again for your trust and support. We look forward to engaging with you again soon. Thank you, everyone.

Thank you, management team. On behalf of Nuvoco Vistas Corporation Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.