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Dalmia Bharat Ltd
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[Audio Gap] made during the course of this call may not be based on historical information or facts and may be forward-looking statements. The forward-looking statements are based on expectations and projections and may involve a number of risks and uncertainties and other factors that could cause actual results, opportunities and growth potential to differ materially from those suggested by such statements.On the call, we have with us Mr. Puneet Dalmia, MD, Dalmia Bharat Limited; Mr. Mahendra Singhi, Managing Director and CEO, Dalmia Cement Bharat Limited; Mr. Dharmender Tuteja, CFO, Dalmia Bharat Limited; Mr. Rajiv Bansal, Group Head, Strategy and Transformation; and other management of the company.I would now like to hand the conference over to Ms. Aditi Mittal, Head, Investor Relations at Dalmia Bharat. Thank you, and over to you, ma'am.
Thank you, Nirav. Good morning, everybody. A very warm welcome to all of you in the Q1 '22 earnings call of Dalmia Bharat Limited. Hope you all had a chance to go through the results and also a brief presentation, which we filed this morning with regards to the capital allocation framework and capacity expansion plans, which we're going to be laying down during the course of this call. If not, the same can also be downloaded from our website from -- under the Investors section.Without taking much time, I'll hand over the call to Mr. Puneet Dalmia for his opening remarks. Over to you.
Thank you, Aditi. Good morning, everyone. As the second wave settles down, I hope all of you and your families are safe and well.Though the recent pandemic has caused some disruption, we have deep conviction in the India macro story and the intrinsic growth potential of India. There is a large-scale metamorphosis going on in the Indian economy and society, which is bigger in scale and scope compared to the 1991 liberalization reforms. As millions of people get lifted out of poverty, a massive middle class will get created, driving a consumption and housing boom. And as India marches confidently towards becoming one of the top 3 economies of the world, India will continue to build world-class infrastructure across the board to enable economic growth. We see both infra and housing as strong and sustainable demand drivers for cement demand over the next decade.To serve this enormous growth in cement consumption that is likely to happen, we have set ourselves the following 3 strategic targets for the next 10 years: one, we want to be a pan-India pure-play cement company; two, we will have a significant presence in every market that we serve; and third, that we will grow our capacity to between 110 million to 130 million tonnes by 2031.We have spent a lot of time discussing and deliberating our capital allocation policy within the management team and our Board over the last few months. I would like to thank many of our investors who gave us valuable inputs on how to look at our capital allocation. I know that we have taken 1 quarter extra to come back to you on this issue, but it has been a very worthwhile and a high-quality exercise.Just like we were the first cement company to announce net zero carbon by 2040, we are excited to be the first cement company in India to formally announce a capital allocation policy. The central principles that have driven our thinking on capital allocation is that Dalmia will deliver a predictable, sustainable and profitable growth over the next decade. And all this with a strong balance sheet, with the highest standards of corporate governance.We looked at our 11% capacity CAGR over the past 10 years and realized that our capacity growth was uneven in the first 5 years at 25% CAGR compared to the next 5 years at 4% CAGR. We are now making a 10-year plan to grow in a much more predictable manner with a 15% capacity CAGR, which will take our capacity to between 110 million to 130 million tonnes by 2031.Though our growth will be a judicious mix of both organic and inorganic opportunities, we will lay much more emphasis on the cost-efficient, predictable and easier-to-plan organic growth.While our 10-year plan is to reach between 110 million to 130 million tonnes of capacity, but in the next 3 years, we have firm plans to reach a capacity of 45.5 million tonnes. We are further detailing our plans to reach 60 million tonnes by March 2025, which we will announce in the next 9 to 12 months. The details of our journey to 48.5 million tonnes will be shared by Mr. Singhi later in this call.While pursuing predictable growth, we also want to ensure that our shareholders have a predictable trajectory of returns. Hence, we are making a significant shift in our policy of returning capital to our shareholders. From this financial year onwards, we are allocating up to 10% of our operating cash flows towards dividend and share buybacks.Dalmia took its responsibility towards the environment very seriously, much more -- much before it became fashionable and now a business compulsion. We are proud to be one of the greenest cement companies on the planet, and we will continue to reduce our carbon footprint ahead of our peers.Today, we are announcing a bold commitment to become a 100% blended cement company over the next 5 years. This will substantially reduce our clinker factor and carbon footprint in the years ahead. We are currently below 500 kilograms of CO2 per tonne of cement, and we will bring this close to 400 by 2025 and below 400 by 2030. However, we will continuously find newer ways to accelerate this reduction and come back to you with our progress on execution periodically.I have been named Chairman of the 25-member Cement Development Council made by the Government of India for a period of 2 years starting 5th July 2021. With all humility, I accept this responsibility, and I will work closely with all stakeholders to showcase the cement sector in India to the whole world as a standout story of decarbonization in a hard-to-abate sector.As a part of our capital allocation policy, we are proposing an innovation in green fund by allocating up to 10% of our operating cash flows to develop and adopt innovative technologies to combat climate change. This fund would be used for nurturing breakthrough innovations such as developing low-carbon cements, [indiscernible] for carbon capture technology, mineralization, oxyfuel technology, heat electrification, green hydrogen, et cetera. As a part of this -- a part of this allocation will be used towards continuously reducing our carbon footprint by investing in renewable power, substituting fossil fuels and using alternate materials to substitute clinker.Since inception, we have always been amongst one of the most profitable cement companies in India. While we pursue a lower carbon footprint, we will also continue to go lower on the cost curve. There is still a lot of room left for Dalmia to cover on the cost reduction side.We are allocating INR 1,000 crores to INR 1,200 crores over the next 2 to 3 years to invest in waste heat recovery systems, solar power and equipment and IT to substitute fossil fuels and clinker. Additionally, INR 900 crores to INR 1,000 crores would be applied towards certain ROI-yielding CapEx and also regular maintenance of our plants. Majority of these investments will lower our variable costs, while simultaneously reducing our carbon footprint. With these initiatives, we are targeting an ROCE of 14% to 15% over the next few years.As we set out to pursue our vision of being a pan-India pure-play cement company over the next decade and deliver a more predictable growth, we are absolutely clear that we want to do this with a very strong balance sheet. Over the last 10 years, we grew capacity at 11% CAGR. And today, we are a net debt-free company. We can continue to grow capacity at 10% CAGR in the future without taking any debt whatsoever.However, we believe that the cement sector in India will consolidate further and big players will become bigger. In line with our vision of participating in industry consolidation, we are targeting a 15% CAGR in capacity, and we will finance this growth through a prudent mix of debt and equity. Our right mix of debt and equity will also help us in reducing the weighted average cost of capital and improving returns to our shareholders. Based on a lot of deliberation and a detailed analysis, we will be comfortable with a net debt to EBITDA of up to 2x.Since growth opportunities, both inorganic and organic, are never secular, we may at times be required to exceed the above ratio of 2x. However, we believe that it would only be for very exceptional cases and for large strategic inorganic opportunities. And we will endeavor to bring it back within 2x in a definite time period.Over the last few months, during our engagement with investors, we had received a lot of constructive feedback on sharpening our focus on our core cement business. We looked at our historical journey over the last 10 years, and we learned that by creating pure-play businesses, we have reaped significant benefits in business performance due to management focus and accountability. We will continue the same strategic direction and will make Dalmia Bharat a pure-play cement company.In line with our strategy of creating a pure-play cement companies, we reviewed the building materials' retail and the refractory business. After detailed deliberations in the Board meeting yesterday, the Board has decided to divest the retail business from DCBL. We expect to complete this divestment process within the next 3 to 4 months. Till 30th June, DCBL has made a total investment of INR 99 crores in this business, and the Board has approved an additional allocation of INR 40 crores to meet the expenses till the date of divestment.In refractories, DCBL has divested its refractory business to Dalmia Bharat Refractory Limited. The divestment has been done at a fair market valuation undertaken by Grant Thornton. The scheme has been approved by the shareholders and is currently pending with NCLT for its final approval.During this quarter, we have also divested 4.5% of our stake in IEX, and we will continue to evaluate our position in the same. We have also made changes to our treasury policy and clearly articulated that at least 85% of the money should be invested in AAA-rated debt instruments, while the balance 15% can be in AA+-rated debt instruments.I've always maintained that our people are our biggest assets. And we have got here because of a committed, hard-working and ambitious management team. We saw the magic they produced during the first wave of COVID last year by delivering our best performance ever. Even this time, during the second wave, as COVID spread rapidly into rural areas, we navigated several mini lockdowns, a temporary oxygen crisis and an incredible disruption in supply chains with great commitment and finesse. Our leaders did a great job and managed the business very well while keeping deep empathy and the morale high.In the journey ahead, our people will be the most important focus personally for me, and we will emphasize disproportionately towards building a great culture and a strong value system. Another important area of my personal focus in the coming years will be to continuously focus on building more transparency and embracing the highest standards of governance. A very key event in this Board meeting is that the Board has recommended the appointment of 1 of the big 5, Grant Thornton as auditors of Dalmia Bharat Limited. Approval for the same is yet to be taken from the shareholders.I thank you all once again for your valuable inputs and constructive feedback on how to think about our future journey.Just to quickly summarize, Dalmia will be a pan-India pure-play cement company with a capacity CAGR of 15%, which will take our capacity to 110 million to 130 million tonnes by 2031. This growth will be achieved with the highest standards of transparency and governance and a strong balance sheet, keeping the net debt to EBITDA under 2x. Our treasury will be invested only in AAA or AA+ debt instruments. Our growth will be more predictable, and we will focus much more on organic growth and pursue strategic acquisition based on our long-term footprint. We will allocate up to 10% of our operating cash flows for returning to shareholders through dividend and share buybacks.We will grow to be a fully responsible -- we will grow, yet be fully responsible towards the environment. To pursue our RE100 and net zero carbon goals, we will allocate up to 10% of our operating cash flow towards an innovation in green fund, which will be used to develop and adopt the latest environment-friendly and construction technologies. The balance available funds, along with any debt, will be used to fund our growth journey to 110 million to 130 million tonnes.In line with our vision to create a pure-play company, the Board has decided to divest the construction retail business in the next 3 to 4 months, and the refractory divestment is also approved by shareholders and it is awaiting the final NCLT approval. We have made some very strategic and significant announcements during this call, and we are super excited about it. We will continue to seek your guidance, support and feedback from time to time.I would now like to hand over the call to Mr. Singhi for an update on the quarterly performance and to share the specifics of our growth plan in 45 million tonnes. Thank you.
Thank you, Puneet ji. Dear friends, a very happy morning to all of you. In my view, today is a historic day for Dalmia Bharat Group as we have been able to lay down and share with all our stakeholders what our vision is for next 10 years, the way transparently we have come out with our vision on environment, on social front, on governance front as well as on sustainable and profitable growth, I think it will go a long way to make us as one of the most important players even in the field of ESG.Dear friends, the pandemic has [indiscernible] the unthinkable and the separate life world over. I'm very proud of our team that even during this period also, we have delivered a great and consistent performance.First, to this call also, I would like to thank my own team as well as the government and the other society who has helped us to take care of people and the society. We have made our all best efforts to take care of the people by contributing in one way or other by providing all sort of services so that people are sure of their health and the future. We were also very happy to contribute significantly towards Government's efforts to meet their COVID results.Friends, like what Puneet ji has shared, that we have always believed in our today and tomorrow. And tomorrow, not only on the business, but on the facility also. We could continue our leadership role and facility as well as the green growth and that has helped us to build out also our carbon footprint to almost 492 kg per tonne of cement.Here, I would also like to share with you that with the appointment of Puneet ji as Chairman of Development Council, it will give not only the Dalmia Bharat Group, but to the all cement companies of India a great opportunity to excel in all areas of secular economy, all areas of decarbonization and how to use the most of the materials.We have been able to take important role in global facility world and based on that and based on our performance, COP26 Presidency has made our company as one of the 16 COP26 business leaders who can play a very important role in garnering the support of various organizations for ways to zero as well also show a leadership.We are also very happy to share that the World Bank Group has appointed us as 1 of the 2 global carbon pricing champion so that we can create awareness about the carbon, we can create awareness about growth opportunities and challenges on account of carbon.Friends, we have always believed in philosophy of clean and green is profitable and sustainable. And the same philosophy would be pursued while first targeting a capacity growth plan of 48.5 million tonnes and then reaching to a level of 110 million to 130 million tonnes by 2031 in the most sustainable way. We will surely now try to highlight that how we are going to meet our target of 48.5 million tonnes in next 2 years. So let me share that detail. And before that, let me also highlight how is our ongoing projects going on.So in regards to our commercial production of Line 2 of grinding unit -- Odisha's grinding unit, we are expecting to make it commercial by September end. In terms of trial production of Murli cement, it will start in few months' time, and we are expecting that commercial production should start by December this year. This will take us our capacity to 36 million tonnes by end of financial year '22.The Bihar grinding unit is expected to begin production by March '24. The remaining CapEx on the sales, along with some net acquisitions for limestone augmentation is close to around INR 2,000 crores.The market in East continues to remain buoyant, and we have tremendous confidence in the growth prospects of the region. And accordingly, we would be expanding in the East market also in addition to expanding our footprint in South and Northeast. We are now targeting to increase our clinker capacity in totality to 23.4 million tonnes and grinding to 48.5 million tonnes.Let me also share the experience which we got by commencing Line #3 [indiscernible] line of 9,500 tonnes per day. And it has now become one of the best in terms of cheap consumption, best in terms of specific power consumption, best in terms of environment compliance. And based on this experience, now we have taken up various technological measures to improve the capacity of all our preposition lines in one way or other so that the capacity can now move to 23.4 million tonnes. And the recent pickup of clinker by region would be South will have 9.4 million tonnes; East, 8.3 million tonnes; and Northeast, 3.3 million tonnes. And further, the capacity of Murli would also be added, which will be 2.4 million tonnes.On grinding side, now we will be adding 2 new grinding, greenfield split grinding units in South with each unit having a capacity of 1.5 million tonnes to cater to markets of Tamil Nadu and Kerala.In East, at our Bokaro plant, we'll be anticipating a brownfield expansion of 1.7 million tonnes. Besides this, we have also evaluated each of the existing plants and have undertaken measures to add another 5.3 million tonnes to debottlenecking across all plants.Ladies and gentlemen, these all activities would lead us to a grinding capacity of 48.5 million tonnes by FY '24, and we will be adding 10 million tonnes. This all expansion, this all debottlenecking is in the same philosophy that clean and green is profitable and sustainable and like Puneet ji has highlighted in his remarks that we are moving towards a pure 100% blended cement company by next 5 years.Now regionally, the grinding capacity breakup by March '24 would be: South, 15.9 million tonnes; East, 23.1 million tonnes; Northeast, 5.5 million tonnes; and Murli 4 million tonnes. The cost to add to strengthen debottlenecking and grinding capacity is estimated at around INR 4,700 crores to INR 5,000 crores.Now within our road back to become carbon negative by 2040, we would be further adding various type of growth technologies which will get us to a CC ratio of maximum in both PPC, PSC and PCC.Now we want to highlight that based on various initiatives which we have taken for sustainability, we have also now committed ourselves to join EP100 road map by which 2030, we will make all efforts to get to electric vehicles, where our experienced efforts to be done so that we can also work on facilities even on electric vehicle site.You all are fully aware that we are part of RE100. That means that by 2030, we would be going to 100% renewable energy as well as EP100 by which we are improving our energy productivity. And joining all 3 initiatives together, we have become the first company in global manufacturing world that -- which is syndicate for all these initiatives.We are spending close to INR 1,000 crores to INR 1,200 crores for building solar power capacity,with typically system and increasing proportion of green fuel in our fuel mix. By March '23, our solar capacity would be around 87 megawatts and WHRS 62 megawatts. We are hopeful that by this period, all of this would be having WHRS capacity.Furthermore, there would be an expenditure of close to INR 1,000 crores upon certain ROI initiatives and routine maintenance expenses. So this is, friends, a broad overview of what we are doing to work on CapEx for adding capacity to 48.5 million tonnes. Over and about that, the efforts would be to create a limestone capability for various new greenfield-brownfield projects, which will help us to reach to our vision of 110 million to 130 million tonnes by 2031.Now let me move to quarterly performance. The revenue for the quarter was INR 2,589 crores. And the EBITDA stood at INR 700 crores. Both revenue and EBITDA witnessed strong growth at 36% and 14%, respectively, on Y-o-Y basis. Despite the continuous cost increase, the EBITDA margin remained healthy at 27% and total EBITDA at INR 1,430 crores.Despite a sharp increase in the price of slag, over the last few quarters, we were able to maintain our raw material costs at INR 855 per tonne, with the change in the product mix from Portland Slag Cement to Portland Composite Cement.Our fuel and power cost increased to INR 1,054 per tonne in the quarter due to increase in cost of petcoke and coal, which has also now become a [indiscernible] phenomena.Petcoke prices are as all-time high of around $130 per tonne compared to what it was about $70 per tonne in Q1 FY '21.We have been continuously reducing the proportion of petcoke with a few big, as many times I highlighted that all our plants are ready to use any economic fuel.While for the quarter, the export percentage came down to 46% and invested earnings for June month. We were able to bring it down further to 34%. We're optimizing the fuel rigs looking to economic viability.The most important area where I would like to highlight is our journey towards green fuel, which is otherwise called alternate fuel. For us, whatever it's fair, either the cost or the carbon footprint, that is green. So we have an increased usage of green fuel, which stood at 9.1% of the fuel mix as compared to 8.4% in Q4 last year and 6% in Q1 FY '21.In fact, in June, we increased the green fuel percentage at the highest level of 14%, and we are quite hopeful that then this year-end, we should be able to touch green fuel percentage of 20%, which will also help not only our organization to bring down the cost and bring down the carbon footprints, but it will also help the municipalities, the cities as well as various companies from where you would be taking care of their hazardous waste.In terms of logistic cost, which has marginally inched up to INR 1,057 tonne during the quarter despite various measures which we have taken, but at the same time, the cost of this has impacted us also and most of others also.Friends, the beginning of new fiscal, we have been tepid, but for now, the worst tends to be behind us. With the forecast of the third consecutive normal monsoon by IMD, the recent increase in MSP by the government and improved foodgrain production, the rural housing demand is expected to bounce back naturally.The government has lost the last 2 years, but looking to some policies which are making or which have been created, we are quite hopeful that now with the support of the government also, a new CapEx line is starting both in terms of industrial productivity also, of course, with the support of few PLI schemes also and at the same time improvement in rural economies.We are fully geared up for any opportunity that we come up our way. We have used the downtime of pandemic in one or other to review, reassess and redesign and now we are a much stronger and robust than ever before. And I'm sure the way Puneet ji has highlighted the future story, you would all agree.Our vision to grow into a larger, more profitable, more sustainable and more respectable company would surely need the way for us in time to come. Our whole team not only at management, but total team of Dalmia Bharat's family members are fully committed to work on ESG, which is good for each and every one of the member of the globe.I'm thankful for your patient hearing. And then now I'll hand it over to our moderator. Thank you, friends. Good day, and good year ahead.
[Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.
Big congratulations on coming out with an excellent capital allocation policy. I think it addresses a large part of all the investor feedback. I have 2 set of questions. First on the quarter and then on the expansion.Now starting with the quarter, our volume performance appears to be a little bit weak and it appears that we have lost some market share in East. Also fixed cost is a bit on a higher side. So is it, I mean, possible to share some details as to why have we lost market share? And is it more of a specific competitor issue getting more aggressive or some internal issue with respect to quality or something? And then how do we plan to fix this in coming quarters?
Sure. So first, I would like to say that in Q1 last year, our performance was acceptable and more particularly in East when many of the cement players could not start their plant, but our team could start the plant, could scale the quantity. And that's why if you look at our performance of Q1 quantity per se in East, we were the best.Based on a competitively higher base, you would find that our numbers are competitively lower.At the same time, I would be straight-forward in saying, to some extent, in East, we lost some market share in the month of April and May based because of few reasons. And one of the major reasons was, one, the growth stoppage of our Cuttack grinding unit for few days on account of COVID situation in that area. And secondly, some changes which we did in our marketing plan, based on that, we lost market share. But now we have already started regaining our market share. And when we meet next time in this investor call, I'll be very happy to share that how much market share we have been able to regain.Now the competition would continue and it should continue, so that -- with everyone, but there are no issues in regard to customer or internal, including quality. We are still the preferred brand for many, many consumers, both in terms of retail as well as in terms of institutions also.
Understood. That's helpful. Sir, the second set of question on the expansion plan. Now we've got very limited time to understand it. But overall, it looks like 50% of our expansion is through debottlenecking and we are adding somewhere around 15-odd million tonnes -- or 15% on the capacity base just by debottlenecking. So this level of debottlenecking is quite unprecedented for a cement producer.So I just want to understand more details. Is it some low hanging fruit, which is available only with Dalmia? Or is it possible across the industry now in coming years? And what exactly are we doing here in terms of debottlenecking? And then in the overall CapEx of INR 5,000-odd crores for 10 million tonnes, how much are we spending for this debottlenecking and the remaining greenfield, brownfield?
First, I would like to say that our team is fully capable of understanding new technological innovations as well as to get best out of each and every plant. Now -- based on that, now future looks great in terms of demand, in terms of growth opportunity and that's why a detailed exercise was done for each and every manufacturing plant as well as well the cement grinding facilities that what best can be churned out of it.Our philosophy is use less and produce more. So even if you are able to produce more from the adjusting unit by doing stated debottlenecking, by changing certain equipment, by expanding cyclones, by making changes in fuel or by making some small, small changes here and there, why not to do that? One or other way, many companies do that and that gets done also.So I would say that it may or may not be able to be if available for others. But I would say that with the management focus and the capability of the management, we are able to do it. We'll be able to do it. And we have also understood that when we do this debottlenecking or certain addition of small, small equipments, it is very cost effective and it is very fast also. And that's why you would find that all these activities would be done by March '23 in a major way, March '23. So we are quite hopeful that with this, we'll be able to churn best out of our existing plant. We'll be able to get best out of our people.
Understood. And Puneet ji, what would be the breakup in terms of when you're spending INR 5,000 crores for 10 million tonnes? So for this 5 million tonnes, how much are we spending?
Yes. So 5 million tonnes, exact number, maybe we'll just share in the next 10 minutes.
Okay. If I may just ask one question. On the CC ratio in the East, we are maintaining a 2.9 on the expanded capacity, which I think is industry higher. So what exactly do you think is a production capability? Because I mean, the norm is more of 2, 2.2 in East. So do you believe that consumer acceptability to this higher blending ratio would develop over time? Or how exactly do we plan to transit the consumer acceptability towards this 3x blending?
Good question. First, I would like to highlight that we have been always vigor in ensuring that we produce and give a sustainable green cement. And that's why in the East also, since last many years, when we were able to change our product mix with the best technology available, we were able to use maximum slag, which has helped not only us, not only the globe, but it also helped the consumers. And based on that now slowing slowly, we are moving away from PPC as and when it will be possible in the year or 2. And at the same time, we are also focusing on both Portland Composite Cement and Portland Slag Cement.So as far as the acceptability of the cement is concerned, there is no issues because: one, the quality of cement is great in terms of [indiscernible]. And at the same time, the experienced technical services team which also support the people to use the cement in the best possible way. So we are quite hopeful that the CC ratio, which is understood in the mathematical way. But if one tries to understand the cement in its quality, everybody would agree that it is possible. Yes?
Sorry, sorry. Just if I may squeeze in just last question on the CapEx given quite a significant announcement. So we are planning to spend INR 10,000 crores in the next 2.5 hours -- 2.5 years. I mean if you could share what would be an annual breakup of CapEx? And how much have we spent in 1Q, that would be very helpful.
Yes, yes. Dharmender, would you like to share?
Yes. In the first year, it may be around INR 4,000 crores and the remaining amount will get spent in the next 2 years.
So first year is FY '22, INR 4,000 crores?
Yes, please. Yes, please.
And what have we spent in 1Q?
Quarter 1 is only about, let's say, INR 300 crores or so. Then of course, amounts will get spent in the coming quarters.
Okay. So INR 3,700 crores. Okay, got it.
The next question is from the line of Amit Murarka from Motilal Oswal Financial Service.
Congratulations on the capital allocation policy. So just a few questions on that front, particularly the CapEx on the capacity side. So in announcement, how I see is like the expansions are more on debottlenecking rather than the new units being set up actually. So -- and if I had to just look at like South, like in South, I think you were looking at 3.9 million tonne expansion, 3 million tonne expansion plus 0.9 million tonne of debottlenecking. But for that, the clinker seems roughly as 1.6. So that implies a very high cement to clinker ratio. And South as a market, I believe, doesn't add that much of blended cement as slag cement. So how do we think about the blending ratio in South wherein you seem to be indicating that the ratios will be higher going ahead?
Yes. So like we highlighted that now we have started our journey towards 100% blended cement company within 5 years. So with that aim in mind, we have started even now also, as we speak, increasing our blended cement, which is PPC in South in a larger way. And in South at the moment, we are not targeting the slag cement, but we are targeting that slowly and slowly, we should be only producing Portland Pozzolana Cement. And even in cement scenario also, there are many institutional buyers also who do use the PPC.Secondly, also, I would like to highlight that now Government of India is also figuring a big way how to promote green products and the blended cement is part of those green products. Government is thinking how to make a green route in which they can use blended cement as well they can use flyers or other materials also.So now we are looking at the future because we are just not looking at past what has happened. Everybody has to now understand what's the need of our -- need of the future for the country also and for the globe also. So based on that, we have said that, yes, we would be moving towards blended cement and accordingly, we should see if that is grinding.
Okay. And the clinker expansion that you've mentioned in the presentation, is that all debottlenecking or there is a new clinker line that is coming up also?
So all debottlenecking like what I said that we could identify various opportunities which are lined in each and every plant and our experience of putting up one of the best technologically towards plant Line 3 in Rajgangpur in Odisha has given us a lot of sides. And now with the support of our technologies in plant suppliers like S. L. Smith, ADH, Heidelberg, Germany and ThyssenKrupp. We are confident that in a very short time, we'll be able to expand this capacity.
Okay. But there is no clinker. New clinker line being set up, right, just to be clear?
Yes, you're right.
Okay. And what will be the -- like the limestone life in each of these regions line after these expanded clinker lines?
We have sufficient legal reserve available for various business, independent from maybe 15 years to 25 years. And secondly, also, now the government has become very positive in identifying the limestone results land, which are lying near the cement plant also and otherwise also. And you would find that now every second month or third month, there are limestone block auctions.Government is mound now to announce and to execute the limestone block auction and which also help us in ramping up our limestone reserve. So we are quite confident that as a cement company, we will be able to further ramp up our limestone reserve in each and every place of existing offices. As well, we'll also be able to get new upsell blocks in the newer areas also.
Sir, and on the context of auctions, like in the north, you had won the block under auction. So like when that will come into production?
Yes. So efforts are now, first, to buy the land there and once we are through with 60%, 70% land purchase, then we'll be able to commit our time line.
Okay. And lastly, just I think Mr. Dalmia also mentioned in the opening comments that you're looking at, I think, 60 million tonnes. So is there further some clarity on -- can you give on that? Or that will come later?
So I'll go with what Mr. Dalmia said that in the next 9 to 12 months, we'll be able to come out with full clarity.
The next question is from the line of Amit Jain from Samsung Asset Management.
The first question I had was on the capacity expansion. So if we look at the 15% CAGR story, but on volume, do you think the 15% CAGR is something we're targeting as well? Or what sort of growth over industry are we looking at when you're planning this sort of capacity expansion?
We are looking at 15% CAGR in terms of our old capacity. I'm sure -- I'm not sure that the capacity of Indian cement sector would be able to grow up to 15%. But we do feel that the cement sector may grow by 7% to 8%, 9%. But our target is that our CAGR should be 15% in terms of cement capacity growth, and this we are looking from our own cement capacity.
No, I understand. [indiscernible] more from a volume perspective in terms of sales.
I think given that we are at the start of the CapEx cycle, we believe that the cement sector has a potential to grow 2% to 3% higher than GDP over the next 7 to 8 years.We are all seeing consolidation also happening in the industry and larger players are gradually increasing their market share. If you have to just see financial year '21 alone, the increase in market share of top 5 groups went from 57% a year before to almost 65%. So I think we expect this consolidation also to gather pace in the coming years. And this makes us believe that the top 4, 5 players have the potential to grow at 14%, 15% CAGR over the next decade. So we'll grow our volume in this range only.
Sure. And the second question I had was on the green fund. I mean I just want to get a sense, is that something you want to do internally? Or are you looking at signing up with start-ups? Or how is the plan there?
I think, look, at the end of the day, we want to use this to enhance our cost competitiveness and green competitiveness. So I think we are still going to make a more -- we have given you the broad direction on what are the areas that we are looking at. I mean what format we will invest, how we will invest, we're going to detail that out, but it is -- ultimately, it has to benefit Dalmia. Either we come down on the cost curve or we come down on carbon footprint. So we are going to absorb these technologies to help us both on the cost side and the grain side.
Sure. Understood. And just the last question from my side is when I look at the capacity expansion for the next 3 years, my understanding was South, you were still sort of underutilized. And if you want to be a pan-India, the current 4-year plan does not seem to include North. Just your thoughts why you kind of put your capacity in South ahead of North.
Sure. So if you break up South, I think there is Tamil Nadu and Kerala and there is Andhra Pradesh and Karnataka. I think we are adding most of our capacity in Tamil Nadu and Kerala to serve the Tamil Nadu and Kerala markets, which we think we have a better cost position there compared to some of the Andhra players. And we think a lot of cement which comes from outside South can be substituted by local capacity. So bulk of our capacity in South is getting added in to serve the Tamil Nadu and Kerala markets.
And if I can just add, Rajiv here. When you're talking about the next 4 years of the plan that we announced in the next 9 to 12 months, also, we are looking at expanding our footprint in the Central and North India. But at this stage, we're not able to divulge mortgages at this time. But definitely, the 60 million tonne [indiscernible] also will set up footprint in the Northeastern India.
The next question is from the line of Kamlesh from Prabhudas Lilladher.
Yes. One question on the part of this ongoing expansion. So if I recollect in last quarter con call, we had told that roughly around INR 960 crores is pending to the investors. But in this presentation, we have given that 1,950 crores to INR 2,000 crores is pending on the ongoing expansion. So any clarity on that part?
So there are 3 projects which are ongoing projects. One is Cuttack or Odisha grinding unit. And second one is the Murli, which is going to be commercialized by December. And third one, where the major CapEx is there to be spent is of Bihar grinding unit. So this is all broadly distributed in these 3 units.
No, sir, I was asking that we were guiding that the pending CapEx is INR 1,960 crore. But now I see the amount, it is INR 1,950 crores to INR 2,000 crores. And it's in the last quarter con call only.
We're adding waste-heat recovery system in Murli, and also, I think, the Bihar grinding unit, [ Cygni ] was that part of this?
So Kamlesh, I'll tell you. We are also acquiring certain lands in the Eastern region for augmenting a limestone capacity there. So which is why you will see that number increasing. The budget for Bihar grinding unit for the remaining CapEx of INR 3,200 crores remains the same. There is no change in that.
Yes. But INR 3,200 crores was the total CapEx which we had guided for...
So that still remains. Now over and above, you will also see we are doing some clinker debottlenecking. And I think over a period of time, as the company needs to spend a certain amount of money for augmenting the land or on limestone reserve. So we passed that extra money, which will now be used for augmenting at least the land acquisition for the limestone exploitation that we need. So that actually captures that incremental amount there.
Okay. And so that is INR 1,000 crores extra over and above that?
So Bihar grinding unit was always budgeted at about INR 780-odd crores, so that's remain. KCW has hardly INR 100-odd crores left because they're only commercializing it soon. And Murli was about INR 400 crores, INR 450-odd crores actually. So that's how the remaining that is left of the INR 2,000 crores is towards the land.
Okay. And sir, on the Bihar grinding unit, in last quarter, we had guided that it would be March '23. Now we are guiding March '24. So on one hand, we are announcing such a large CapEx, which includes roughly around 3 million tonnes of a greenfield plant and we are targeting FY '24. But for a grinding unit, we are now delaying year after year. I do know that there has been a COVID in between. But even then March '24, like say, like around a year or 2 there, we were targeting like December '22. So it's almost like the March '24. And any clarity on the part of land acquisition or where we are in terms of that grinding unit?
Yes. It's a very right and pertinent question. We were, of course, hoping that yes, whatever you said, we would be able to meet the target. But at the same time on account of the sudden issues in the land acquisition where we were planning earlier, so we are now required to shift to some nearby land in that area. On that account, this delay is there.And then we said that March '24, yes, we are saying that it will be FY '24, but that doesn't mean that this plant will get commissioned by March '24. It will be in the -- maybe between July to September '23. But then yes, what we said is that by FY '24, this will be commissioned. And we are still making efforts that how this can be preponed, but at the moment, we'll not like to be very specific gain because a few things are in offering.
And sir, further clarity on the part of this greenfield plant. So what is the status of land acquisition or mine? And even for the 2 greenfield grinding units which we are putting in Tamil Nadu and Kerala?
Yes. So greenfield grinding units, whatever say, we are talking the things are in place, and we should be able to complete this by March '23.
Okay. And sir, lastly, on this sustainability and green energy projects, INR 1,200 crore, which we are committed, does it include the wastage recovery and solar plants as well? Or it's on the technology side or carbon-free cement around that there?
This includes solar power plant and whatever we said in our CapEx plan, that includes WHRS solar power plant and a few other green initiatives. And whatever we have talked about innovation front, that is separate.
Okay. And sir, would there be further plans on divesting further stake in IEX? Or what's the status on that part?
So this is what we have said is that we will go on examining it and whatever -- whenever there is a right time, the same can be done. But then we'll go examine it at the moment. This is what our stand is.
See, just to add to what Mr. Singhi just said, I think if you listened to what Puneet said, we want to be a pure-play cement company. We have clearly divested 4.5% stake in IEX in the quarter. And this [indiscernible] as and when we require funds to control the capital allocation. As and when there is a need for investing back in the business, you will see us ticking stand on IEX and see what needs to be done. So our direction is very clear. Our goal process is very clear. The timing is very difficult to predict because it's a public company, and we cannot really divulge in terms of what happens [indiscernible] on the stock of the -- probably other public companies.
So just last thing on the Northeast 1.2 brownfield expansion. So the Northeast capacity, even, let's say, if I take FY '18 or '19 year, we had been able to utilize those facilities at hardly around 60%. And year after year, let's say, there has been no improvement in terms of incremental production. So what's the issue over there? And on top of that, we are spending further by 1.2-odd million tonne capacity there. So over 4 million tonnes, like we are hardly utilizing that 2.3 million, 2.4 million tonnes. And this is not for a particular year, it's like 5, 6 years we have been stagnant at that particular utilization business.
If you look at last 2 years' volume, you would find that we have grown in Northeast and now more focused in Northeast. We would like to remain ourselves prepared for any volume growth in the area. And it -- we are on the view that we should not start putting up the capacity when we reach to 80%, 90% level, but we should be able to foresee -- forecast the future and, accordingly, we should put up the capacity. We are quite hopeful that with the focus of the government, both central and state, and the way now many such new projects have been announced as well as the new industrial policy, which is also in the offering, we should be able to get good volume growth in years to come.
[Operator Instructions] The next question is from the line of Swagato Ghosh from Franklin Templeton.
Congrats on the capital allocation plan update. This is exactly what we are looking for. A couple of questions on this. When you say that CAGR of 14% to 15%, and there is an element of inorganic growth as well, then that makes the plan a bit unpredictable. So you mentioned about the uniform nature of growth in the last, say, 10 years. Aren't we then, again, looking at a similar kind of a thing, if there are more inorganic opportunities coming in the market in a short period of time would probably participate?And a related question is, where are these inorganic opportunities currently? Because I think the market currently doesn't have much. So why are we kind of very confident about these opportunities in future?
So Swagato, Rajiv here.
Go ahead, Rajiv. Go ahead, go ahead, go ahead.
So Swagato, we are laying on a capital allocation framework really guiding us for the next 10 years. Very difficult to predict inorganic opportunities as and when they come. We're also talking about a pan-India position. We clearly have vision to be a pan-India player. So as you expand into newer geographies, you would have to look at the right mix of organic and inorganic opportunities to expand your footprint.Having said that, we are not saying that we will wait for the inorganic opportunity to come to be able to grow to a CAGR of 14% to 15%. What we are saying is we will plan organic growth. We will do land acquisition, we'll do limestone, we'll do everything ahead of time. We'll plan, we'll be more predictable so that we have more secular and try to make it as secular as possible. However, there could be inorganic opportunities. And as and when they come, we have to tweak our organic growth plans to make sure that we still meet the numbers that we have set out for, and we don't exceed our 2x net debt to EBITDA.So that is what we are looking at. It's difficult to look at how things will play over the next 10 years, but our vision is very clear. Our charge is very clear. We're not going to leave it for inorganic opportunities alone. We'll have a planned growth. And if an inorganic opportunity comes, then we will look at how to balance between organic and inorganic. So that is what we're trying to say here.
Okay. No, that is very clear. And also on the predictability part, a large part of the earnings driver is pricing. So when as an investor, I'm like trying to get some comfort about predictable growth. What kind of comfort can I draw from the pricing trajectory? Because it has been very volatile in the last 10 years, if I'm looking at Dalmia's earnings, that will again be a key driver and probably it'll again be volatile. So how can I get comfort on that factor?
Swagato, if I look at the last 10 years, the pricing has been volatile quarter-on-quarter. But if I look at the last 10 years, pricing on average has gone up between 1% to 2% year-on-year, right? So when we're looking at pricing, it's very difficult to predict because there is a regional player, there is a state player and the other factors come into picture, which is competition and other things.So pricing, the way I look at this, if I look at the last 10 year secular trend, it is going up 1% to 2% year-on-year. If I look at the last commodity cycle, the CapEx cycle, the cement prices tend to go up by almost 2% year-on-year. So I think we are just at the start of a CapEx cycle. For modeling purposes, we have not assumed that price increase beyond 1% year-on-year. So our thinking is even if the prices go up by 1%, I think a lot of focus has to be on improving the patient efficiency, cost drivers. And pricing is something which will be icing on the cake. So pricing is difficult to predict, but I think on a secular trend, I think it gives us a lot of comfort. Puneet, if you want to add something? Singhi ji?
No. I think I agree with you. I think our whole model is built on basically continuous volume growth and improving our operational efficiencies. But we also believe that as consolidation happens, depending upon the degree to which it happens, industry will gain more pricing power. And while we have assumed 1% pricing growth in our model, we think that if consolidation happens, this could be better, but that's icing on the cake.
The next question is from the line of Madhav Marda from Fidelity Investments.
I think many of the questions were answered, but one of the questions that I had was on the clinker cement mix. Just broadly, if I look at it in the next 3 to 4 years, we're expecting our clinker to move to about 23 million tonnes and the cement to be 48 million tonnes. So even if I assume that East India has a higher sort of blending factor, do you think that 23 million tonnes of clinker at the portfolio level for the company is enough for the 48 million tonne cement? Or would we have some excess demand in the mix?
In my view, with our strategy to go for blended cement, it will be sufficient. And at the same time, if you study any clinker and cement production files, you would find that companies, including us, are able to produce maybe 90% or 100% clinker. But at the same time, as per the requirement of cement in the market, cement gets produced. So all the time, 100% cement capacity -- cement is not produced, but at the same time, but clinker gets reduced. So the point is that we are quite confident that with the clinker capacity of 23 million tonne, we should be able to produce 50 million tonne.
Okay. Good. And sir, the second question was on the capacity growth. I think Mr. Dalmia did mention that in the 15% capacity CAGR, broadly 10% is mostly expecting to be on the organic side and 5% on the inorganic side. Is that how we are broadly thinking for the next 10 years?
No, no, no. Go ahead, Rajiv.
No, what we are seeing is that we don't need to take debt for being able to grow at 10% CAGR over the next 10 years. So in our model, we can grow 7% year-on-year without the need for debt. Because we are targeting a higher growth of 15%, we have to look at the judicious mix of debt and equity. And it's not saying that 10% is organic and 5% is inorganic. We will look at what kind of inorganic opportunities come our way, whether it's a strategic fit, whether it is in increasing our footprint in the regions that we want to be and then look at inorganic opportunities. But our planning is going to be more -- almost everything based on organic. And if any organic opportunity comes, then we'll look at it from a charging perspective.
The next question is from the line of Pinakin from JPMorgan Chase and Company.
My first question relates to, again, capacity addition plans. So at this point of time, we have visibility of 45 -- 48.5 million tonnes. And the company mentioned that over the next 9 to 12 months, we'll have more visibility to take it to 60 million tonnes.But if I look at the plans to go to 110 million to 130 million tonnes by 2031, that effectively implies post 2025 an annual capacity addition of 10 million tonnes. So in that context, sir, when should we expect to get more visibility on that kind of capacity addition in terms of granular projects? Because 10 million tonnes a year is a very large number.
So we say difficult to predict on a long-term basis, this is where we want to be, this is where we want to go. This is what our pan-India vision, and we believe that it has to be in. And given the opportunity that we see in the marketplace, I think the top players will see that amount of growth.Having said that, I think from today, we are 31 million tonnes. We have been able to, to a large extent, being able to detail out the 60 million tonnes. We're announcing 48.5 million right now. And I think in the next 9 to 12 months, and hopefully, by -- in this financial year, we will be able to announce further expansion of 12 million in the Central North and one of the existing regions.So I think this is a big step forward from 31 million to 60 million announcements, detailing it out, allocating capital, I think a big step forward. As we go along, we are also looking at expanding our footprint in the other geographies, that is North Central, West. And you'll have to give us some time. It's very difficult to lay a time frame within which we're able give you our plan for 60 million to 120 million.But if I look at your CAGR, that CAGR though it may be sounding as a 10 million tonne annual capacity increase, it is still above 15%. So we are still -- if you look at the first 4 years, we're clearly saying we'll grow at 15% plus CAGR. And the next 6 years, it is also going to be 15% plus the CAGR. So don't look at the absolute number because as the company becomes larger and larger, the actual numbers don't move much.
Very well said, Rajiv, and I would also like to further add that after few years, the base knot would be the 30 million tonne against which you find 10 million in very high figure. But thereafter, the base would be 60 million tonnes, 70 million tonnes, 80 million tonnes. And for that putting up our capacity of 10 million to 15 million would not be a big, big task. Important would be yes. to identify the right place and go ahead.
My second and last question is on Mr. Dalmia's comments on industry consolidation. Now over the last 10 years, the cement industry did see a fair bit of consolidation, which was primarily driven by industry profitability disappointing versus many new players having large leverage on the balance sheet. The IBC came in. And as part of the ancillary process, many companies had to change ownership.At this point of time, industry profitability is as strong as it has ever been, balance sheets are as strong as it has ever been. So in that context, how does the company see consolidation opportunity emerge? Would they require -- do you see industry profitability go through under the down cycle, which throws the consolidation opportunities? Or do you see some of the existing players or management just deciding to exit to take advantage of the high profitability and get a good deal?
Puneet, let me attempt this and you can add to that. We're talking about consolidation. There is consolidation in 2 different ways. One is acquisition opportunities where you see. Second is, as Puneet said in his opening remarks. So we have seen over the last 3 years, almost 91% of incremental demand is being met by the top 3 player. In the last 1 year, it says the market shares have moved dramatically in few of the top 5 players.Seeing the consolidation of market share is also very important. It is not only about consolidation in terms of merger and acquisition opportunities. And I think even that's what happens. When I'm seeing that we can grow 10% through our internal cash accruals, a smaller player with 3 million, 5 million tonne capacity, even if they have to put a minimum capacity, they have to put at least 2 million tonne, 2.5-million tonne capacity. They have to borrow big amount of money because the internal cash flows are not enough to be able to fund that kind of growth.So their ability to grow fast actually becomes constrained because they depend on external debt in a big way. And given that what we are seeing with the kind of NPAs, I think it's not easy. You need an execution track record. See, for us also, it took us almost 10, 11 years to go from 9 million tonnes to 31 million tonnes. And if the industry is going to grow at a much faster pace during this CapEx cycle as we expect, we will see consolidation of market share happening in the next 10 years. And that is what our firm belief is. Puneet, if you want to add anything to that?
No, I was just saying that, look, this is -- consolidation is driven by -- I'm first talking M&A and then I will talk about market share as Rajiv said. I think first of all, consolidation is driven by multiple factors, and it depends on different times in the cycle. Sometimes, people want to encash to focus more on their core businesses. There are people -- there are companies which are conglomerates. Sometimes it's due to pressure. Sometimes it is due to succession. So I think when we are talking about a 10-year strategy, I think we have to be ready for all times in the cycle. And it has to fit strategy. It has to also fit our financial return hurdle rates.So we are just giving a broad direction right now. We are not talking about here and now. And I think as you said, here and now, we think that profitability is the best ever. Balance sheets are delevered. That's why our entire focus is on an inorganic expansion plan. I think it just reaffirms the point that you just made.The second point I'm making is that even though capacity M&A may happen during the decade driven by various factors, the larger players will grow more organically and more -- they will take more market share away. So I think the pricing power in the industry, which is the ultimate outcome of consolidation, is going to come even without large M&A to some extent. So I think those are the 2 points that we wanted to make that while we've assumed a pricing growth of 1% in our model, we think there is upside due to consolidation of not just capacity M&A, but even market share.
The next question is from the line of Rajesh Ravi from HDFC Securities.
Yes. Congratulations on a great set of numbers and a detailed presentation, particularly towards capital allocation. My question pertains to on this WHRS capacity, 62 megawatt, which you are running. Could you give some breakup on where and by when these capacities would be getting commissioned?
So with WHRS capacity, all will get commissioned by June '22 everywhere, June or July '22 everywhere. And then all of our [indiscernible] will have the WHRS capacity.
Okay. So by June, so by next year, same time, you'll be having 62 megawatts barring 1 location.
Yes. Yes.
Okay. And second is on the -- can you share some -- like what was your clinker production in FY '21?
Aditi, would you like to share?
Clinker production company on total basis for FY '21?
Aditi or Dharmender?
That was 12.6 million.
12.6 million. Okay. So we were operating close to around 75% on clinker in FY '21. Okay. So again, earlier participants have also asked this. In terms of clinker expansion, the cement to clinker capacity ratio continues to remain at more than 2 ways. So is that a sufficient number? Or it is more of a distributed grinding -- some of those grinding capacity expansions are more strategic in nature and, hence, this skewed number can sustain?
So one, I would say that this is the capability which we are building from producing blended cement. Secondly, you would say that we'll have enough clinker to produce the sort of cement. And then if overall industry average of -- average utilization is 70% and in our case, if it is 80% or 85% also, then also we'll have enough or surplus clinkers to produce cement. So we don't see any challenge as such as well the way technologically, our team has understood the full usage of plant and equipment, we are quite hopeful that this clinker capacity will help us to produce more than 48.6 million tonnes.
Okay. And similarly, for FY '21, what was the production mix that we have achieved on full year basis of OPC, PPC, PSC and composite?
Aditi or Dharmender?
Yes. Last year, cement production was about 20.7 million tonnes. And we had a CC ratio, cement to clinker ratio of 1.65.
Okay. Is it possible to share like how much was PPC and slag cement production?
So maybe, Aditi, offline, you can share this...
Yes, yes, take from her.
For the sales mix of last year, hello, I don't need to change the earnings. For the sales mix of last year, our OPC was somewhere around 17%, 18%. And the rest was all blended. So we've actually progressed to about 83% in blended cement on an overall basis, of which, I think the growth in PCC has been exceptional over the last 3, 4 years. It was almost 15% on FY '21. And CC of the quarter was 18%. So just to tell you directly, 17% OPC; PPC was around 33-odd percent; PCC 15%; and PSC 32%.
And let me also add here that we should look at Indian cement sector as a whole also. And if you look at the Indian cement sector's journey towards blended cement of last 10 years, last 5 years, every year, it is inching up with an additional capacity also because many of the top players who are forward looking, they are advocating of using blended cement, which is good both for the construction also and for the globe also. And you would also find there are few cement companies with blended cement ratio maybe 85% to 95% also.
The next question is from the line of Indrajit from CLSA.
A couple of questions. One, after the current near-term expansion to 48.5 million tonnes, would you have hoped for further debottlenecking or the debottlenecking part of expansion is largely done?
Broadly, I would say it is largely done. But at the same time, with the technological innovations, no one knows that what can be done. When we commissioned our Line 3, then we could understand a few more areas where improvements can be done and technology is always in innovation space. So I would not say that there will not be any scope for future debottlenecking or doing something. But at the same time, whatever is possible, as far our management team as well as the technological suppliers, this is what best you would like to do.
Sure. In regards to your greenfield integrated expansion ex Southeast, South and East, given that [Technical Difficulty] in the new venture on mines that have been auctioned, how confident are we of timely organic greenfield expansion techs of our 4 regions of operations? I mean what are the kind of bottlenecks which are based? And how are we approaching?
So this is how -- what we have shared is that maybe in 9 to 12 months, then we are able to get more certainty about a few areas as well as about the land acquisition part. Then we should be able to share with you that this is broad reaction plan. But -- you and all of you must appreciate the way transparently we have come out that this is our reason, this is our philosophy, this is our action plan, this is what we would like to do. So quarter-by-quarter, quarter-by-quarter, we will go on getting more and more clarity as well as we'll go on giving you more and more new reasons.
All right. And one last question, if I may. Are you sharing what kind of proceeds we can expect from the refractory and retail divestment? Any ballpark numbers?
I think let the Board work on this, and we'll come back to you.
The next question is from the line of Ashish Jain from Macquarie Group.
Sir, I have 2 questions. One, the CapEx breakup that we have given of around INR 4,000 crores to INR 5,000 crores for this capacity addition. Can you break it up between how much is for clinker capacity? How much is greenfield grinding? And how much is the grinding upgrades that we are doing?
Okay. Dharmender, you can share this?
Yes, clinker debottlenecking was going to be around INR 1,200 crores to INR 1,300 crores. More cement capacity additions, which are greenfields, et cetera, that will be around INR 3,000 crores or so. And the ongoing CapEx, which are there, which is less than, that is about INR 1,250 crores to INR 1,300 crores. And rest all will be about INR 3,300 crores -- or INR 3,000 crores to INR 3,500 crores, you can see.
Okay. Okay. And sir, secondly, my question is this journey from 48 to 110 that you've spoken about, as we stand, what is the visibility or what is the confidence we have in terms of either greenfield based upon our current readiness or brownfield based upon whatever limestone or land that we may have? I just want to understand the visibility of 50 to 110 based upon the resources we already have under our belt.
You should try to understand that when we have come out with such message, so what is in progress. But at the same time, we would not like to give you some hazy numbers or hazy period. And that's why we have said, it's growing slowly in 9 to 12 months, we'll come out with a plan for 60 million tonnes. And later on also, more clarity do come, we would share. So at the moment, I would not be able to share you -- with you that was exit plan for beyond 60 million tonnes.
The next question is from the line of Urmik Chhaya from Asian Market Securities.
Just one question. In Q1, the realization is lesser than even Ambuja, which has no presence in South. Is it entirely because of East? And if in that case, when the capacity expansion release happens, how do you see prices behave?
The reason because we don't have exact analysis of Ambuja, but then if you broadly compare then maybe because of better prices, again, in Northern India, that may have some impact. But as far as future is concerned about these prices, with the increasing demand, I think what Rajiv also earlier shared that how the price movement would be there.So we don't see any major challenge. One quarter here and there something can be there. But otherwise, like in South also, broadly, prices are stable. And in East, if you look even of last 3 years, in few quarters, it's plus, in few quarters, it's minus. But as far as say, our brand is concerned, our capability to sell the right segment is concerned, that's great.
Sir, just last question, is on demand and price inversely proportionate?
You know better than me that sometimes it does.
The next question is from the line of Bhavin Chheda from Enam Holdings.
Yes, sir, excellent presentation on capital allocation and good to see the Board taking the investor's feedback of focusing purely on the cement vertical. So just on the capacity expansion plans, which are announced, the South of which I am seeing operation plus the greenfield would be entirely in Tamil Nadu?
Like the greenfield would be in Tamil Nadu to serve the market of Tamil Nadu and Kerala. So the 3 million-tonne would be in Tamil Nadu. But then that will be serving the most prosperous market of Tamil Nadu and Kerala.
Yes, sure. But the capacity which is coming is entirely in Tamil Nadu, right?
No, the 0.9 million tonnes in Belgaum also.
I'm saying 0.3 million tonne is in Tamil Nadu and 0.9 million tonne that would come in our build-out, which will be serving mainly connect markets in past some nearby areas of Barista where it's more profitable.
Okay. The second question, the results had a lot of some dispute, old dispute on the, I think, 26% balance stake in Calcom. So would you like to update on the same?
In this case, the arbitration award, which was pronounced by the arbitrary terminal, that was challenged by the company and the high court, and the high court has stayed that matter. We are confident nothing adverse should happen.
So regarding that unit, can the Board go ahead with any expansion on other plans? Or are there food restrictions on doing anything on that unit?
There are no restrictions placed.
The next question is from the line of Ritesh Shah from Investec.The next question is from the line of Girish Choudhary from Spark Capital.
Congrats on the expansion plan. A couple of questions. Firstly, in the East, you will have a grinding capacity of 24 million tonnes and clinker is around 8 million tonne. While you did discuss about high blending, but in terms of the raw material security, which is the slag, how confident are you in terms of the supplies? I just wanted to get a perspective on this.
We are quite confident of supplies because: one, the steel plants, they are broadly now running at full capacity; and second, there are plans announced by various steel companies to expand their steel production; and thirdly, since to some extent, we would also be moving towards composite cement and so on. So that would also need a little bit lower -- that would need a lower slag. So that way, we are saying that we are quite confident about the ability of raw material in terms of both slag and flyers.
But currently, do you have any contracted supply with the companies yet [indiscernible]? Will they continue on increase?
Yes, we have some long-term contract also and some short-term contract also. But the way we have seen the market, steel companies do need cement companies. We must understand. That's why, they also need us. And we also need slag so that we can produce blended cement, which is good both for profitability also and for the carbon footprint also.
Ladies and gentlemen, due to time constraint, that will be the last question for today. I will now hand the conference over to Mr. Puneet Dalmia for closing comments.
Thank you very much. Once again, I want to thank you all for participating in this conference call and giving us your valuable feedback on how should we look at the future decade. I look forward to continuing this interaction with you and look forward to spending more time to update you on how our announced -- our progress on our expansion is going. We are very excited about the future that India offers. And we are very confident that the best for Dalmia is yet to come. Thank you very much.
Thank you very much. On behalf of Dalmia Bharat Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.
Thank you. Thank you.
Thank you. Good bye.