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Dalmia Bharat Ltd
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Ladies and gentlemen, good day, and welcome to Earnings Conference Call of Dalmia Bharat Limited for the Quarter and The Year Ended 31st March 2022. Please note that this conference call will be for 60 minutes. [Operator Instructions] This conference call is being recorded, and the transcript of the same maybe put up on the website of the company. [Operator Instructions]
Before I hand over the conference to the management, I would like to remind you that certain statements 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, M.D., Dalmia Bharat Limited; Mr. Mahendra Singhi, Managing Director and CEO, Dalmia Cement (Bharat) Limited; Mr. Dharmender Tuteja, CFO, Dalmia Bharat Limited; Mr. Rajiv Bansal, President and Chief Transformation Officer, and other management of the company.
I would now like to hand the conference call over to Ms. Aditi Mittal, Head of Investor Relations. Thank you, and over to you, ma'am.
Thank you, Nirav. Good morning, everyone. Welcome to the Q4 '22 and FY '22 earnings call of Dalmia Bharat Limited. Hope you had a chance to go through the results and the earnings presentation, which is available on our website and can be downloaded from the Investors section 4. I will not take much time and hand over the call to Mr. Dalmia for his opening remarks. Over to you.
Thank you, Aditi. Good morning, everyone. It gives me great pleasure to welcome all of you to the Q4 FY '22 and FY '22 earnings call of Dalmia Bharat Limited. Let me start by giving you my assessment of the year gone by and how I see the next year play out. After that, Singhiji and Dharmender will give you more details about our performance.
If I can put it very candidly, last 1 year has been a mixed year for us with a few hits and a few misses. During the last 1 year, we have increased our capacity by 17%, entered the Western market through commissioning of our Murli plant and we became the first cement company to put out a formal capital allocation policy. We increased our dividend payout as a part of that, laid our vision of 110 million to 130 million tons by 2021, set up a strategy and transformation office under Rajiv Bansal to help us realize our vision, address the concerns of investors on noncore assets.
We improved our governance through appointment of [ EY ] as our internal auditor and Grant Thornton as our statutory auditors, and we made some very important strides in our journey towards ESG. We also created a formal risk management policy and framework. We improved our communication and transparency and laid out a clear treasury policy in line with the best in class. We've also asked Rajiv to head most of our corporate functions in addition to his role as a Chief Transformation Officer to help us transition into a globally respected professional organization.
Just talking about it, I realize that in line with our vision to be a globally respected organization, we have done a lot of work last year to transform this company. But at the same time, we've had a few misses -- during the last year gone by, we had expected, like everyone else, a very strong demand environment coming out of the pandemic with a strong push from the government for increase in infrastructure spending, focus on low-cost housing and rural demand. However, the year turned out to be quite volatile in terms of demand. The demand was good in a few months, while it was completely disappointing in a few others. The input costs during the year have gone up beyond anyone's expectations and it was challenging to manage the cost inflationary pressure without being able to pass on to the consumers.
As you would know, there is a time lag between input costs going up and our ability to pass it on to the consumers. We had to absorb a large part of it during the year, and that impacted our EBITDA and resulting cash flow. In spite of the volatility and challenges, I would say, that we have done a phenomenal job in our cost management, growth and the transformation journey.
I continue to be bullish on the outlook for the sector and the industry. With the GDP growth make that 6% to 8% over the next couple of years, the cement industry could in turn deliver a demand growth of an average of 8% to 9% annually, even the government push towards infrastructure building and low-cost housing. We see robust rural demand, which should help us in the markets where we operate.
What also gives me the confidence is that over the last 2 to 3 months, we have seen demand come back and also price inching up simultaneously. The only major headwind that I see today is further rise in energy prices. It's very difficult to predict how this will play out given the geopolitical issues in Europe and the shutdown in China because of the pandemic. This has resulted in supply-chain disruptions across the globe, resulting in supply constraints and rising inflation. The resultant increase in interest costs would also impact our cost of expansion. This would mean that we have to be prudent in our expenses and on a very tight ship, and we are committed towards doing that.
There have been recent media news about Holcim selling their stake in Ambuja and ACC. The very fact that there has been widespread interest in these assets from so many players including new players, shows the potential of this sector and the contribution it could make to India's growth story. As you would recall, Dalmia Bharat was a part of government's, Adopt a Heritage, project and was identified as the Monument Mitra of nation's iconic 17th century heritage site, the Red Fort. We had -- we have been bestowed with the responsibility to enhance and uplift its tourist potential and cultural importance in a planned and phased manner.
Under the umbrella of Azadi Ka Amrit Mahotsav, we hosted a 10-day cultural festival showcasing the rich diverse culture and heritage of our country. And the event witnessed a massive footfall of over 150,000 people along with the presence of dignitaries from government and business houses. Going forward, too, with an endeavor to showcase our country's rich heritage on a global stage, we will be undertaking a series of events at the Red Fort and I personally invite all of you to be a part of the upcoming events.
This is all from my side, and I thank all of you once again for always being our well-wishers and sharing your valuable inputs and constructive feedback. I would like to hand over the call to Mr. Singhi.
Thanks, Puneetji. Thanks for highlighting about the environment of the country and globally also. Good morning, everyone. Last year has indeed been a dynamic one for the industry with fluctuating volumes and then unprecedented inflation in input cost trend. I'm happy that we ended the year on a positive note with a strong momentum in terms of cost management, price and volume.
We have delivered a strong performance in Q4 after a weak Q3, and we believe that we have the momentum entering into the new financial year FY '23. In Q4, we have been able to perform better than Q3 as we have delivered a volume growth of 16%, while our EBITDA grew by 67% to INR 683 crores. Furthermore, we were able to improve the EBITDA percent by almost 43% from INR 700 per tonne to INR [ 1,036 ] per tonne in Q4.
On a full year basis, in financial year '22, we delivered a volume and revenue growth of 7.3% Y-o-Y at 22.2 million tonnes and 12% (sic) [ 11.6% ] at INR 11,286 crores, respectively. We are also seeing a Y-o-Y price increase of 3.8%. This was, however, to retain an increase to offset the massive increase in energy prices and other input costs. During the year, the imported pet coke prices almost doubled from USD 128 to USD 246 per tonne.. And even the diesel prices also went up by 20%. However, due to proactive initiatives by the team, we have subsequently been able to mitigate the adverse impact to some extent, and the decline in EBITDA was contained at 18% to INR 1,091 a tonne.
Wherein a few years back, we had set efforts on a strategic journey to reduce our dependencies on external fuel supplies and also add to consistency and sustainability of our performance. In line with the same, we started to announce the usage of green fuel and wind power. Green fuel in our fuel mix, it has been growing, and I'm happy to share that over a very short period of time, the percentage of green fuel on full year basis has increased to 13.4%, in Q4 that has been better and now this extends to 16.4%.
At the time, when we witnessed a steep inflation in the fuel pricing, our team's foresightedness and strict actions has yielded results in terms of mitigating the adverse impact. Recently, we have also won the Brinda & Sisai coal block in Eastern India which in years to come will not only add to the above objective, but we'll also build out cost efficiencies. For our company, the overall fuel consumptions rates almost doubled from $78 in FY '21 to $141 in FY '22. In fact, the surge was quite significant even in the last quarter, where our fuel consumption cost increased from $158 per tonne to $181 per tonne within Q3 and Q4. The inflationary headwinds are expected to sustain for some more time and it is estimated that the fuel consumption costs may further increase.
Right, I'm happy to share that despite the diesel price escalation, our freight cost increase was again reasonably contained to 5.9%. And on the back of many expediting initiatives, including [indiscernible], we have managed to retain our leadership position in the freight cost at INR 1,063 per ton. And we also continue to have one of the lowest diesel filled company in the industry.
Now if I took a full year, on a full year basis, the adverse impact of just the input cost going up in our P&L account has been more than INR 850 crores. During the year, we have also doubled our renewable energy capacity from 31 megawatts to 62 megawatts. Having said so, we also realize that the base is low, which also offers us high headroom which renders incremental savings from these investments. On the operations side, we are continuing to take long-term synergy projects and during the year due to the shift in the correct mix and improvement in operating KPIs, we actually have delivered a recent improvement of close to INR 54 per tonne. But considering a steep increase in the input space it just [indiscernible].
Right, before I move ahead, I'm happy to share that with all the collective efforts of the management and the team, we have one of the lowest total cost per tonne at INR 3,989 per tonne for full year FY '22.
In terms of pricing, even though industry price growth of 3% is ahead of the historic average, Y-o-Y price, the price is tend to grow at the same pace as the input cost. Things are now looking up in the bulk of pricing still coming in the last quarter of the year and prices increasing Y-o-Y at almost 6.5% to 7%. We have seen INR 30 to INR 50 increase between December '21 to March '22 exits across all of our regions, and that trend is continuing.
Moving on the regional performance, if we look like regional volumes for our company, both in South and Northeast market, we outperformed and delivered double-digit growth. The performance in South is especially encouraging where over the last couple of years, we have continued to extend our market share and now are amongst the top 3 companies by volume share.
With regard to the market in East. There has been a marginal decline in the overall market size during the year. But despite that, our confidence in the East market potential remains intact as we have continued to work on strategic projects, which will be executed in the region. During the beginning of the year, we had undertaken some controlled experiment in terms of product mix and hedging which initially has led to some distress with a market share of ours. But with the new products stabilizing gradually, we were able to retain our position before end of the year. We remain committed and upbeat about the growth in the Eastern region.
On our part, we will be focusing on improving our share of trades sales and increasing share of premium products in the overall product portfolio. We are happy to share that the share of our premium brand DSP as a percentage of trade sales stood at 20% during the year as compared to 18% last year.
Now in terms of CapEx, in line with the announced growth plan, we diversified and entered the Western region through commercialization of the Murli plant of 2.9 million tonne capacity and closed the year with an capacity of 35.9 million tonne of installed capacity. By March '23, we are targeting a total installed capacity of 40 million tonnes and further we remained on track to reach 58.5 million tonne by March 24.
I also want to mention that while internally, we are working on retaining out the good trajectory beyond 48.5 million tonnes, gut given the recent global turmoil, the volatility of the energy prices and the potential consolidation in the sector, we believe that it is prudent to put a short call to announcement of any implemental new capacity expansion. Having said so, we would continue our efforts to line up the project, and we remain fully committed to reaching out our vision of 110 million to 130 million tons by 2031.
As we march forward, ESG will form a cornerstone of all other decision-making and during that year our CO2 emissions per tonne of cement has further reduced to 489 kg and our Water Positivity rate of 12.5x is one of the highest in the industry, and we are genuinely proud of this. In order to further accelerate our journey to be carbon-negative by 2040, under the Green Strategic Partnership of India and Denmark government, the company has signed an MoU with FLSmidth, Denmark, a cement and technology company to collaborate and develop breakthrough innovations to support sustainability in cement industry. For rest of the details and key financial updates, I would now like to hand over the call with our CFO, Sri Dharmender Tuteja, and I'll be happy to answer all your questions following with his remarks. Thanks, again and good day.
Thank you, Singhiji. Good morning, everyone. As all the major updates have already been covered by Puneetji and Singhiji, I'll quickly move to the key financial updates. Regarding incentives, this quarter we have accrued INR 52 crores of incentives, which takes the financial to numbers about INR 231 crores. The collection during the quarter has been INR 77 crores and the total collection for FY '22 has been about INR 237 crores.
Incentives receivable, as on 31st March stood at INR 65 crores. Going forward, including Murli, we expect incentive accruals to be about INR 240 crores for FY '23 and FY '24 each. That being said, during the quarter, we also received the revised letter for the Murli incentive entitlement, where the time limit for availment of the incentives now stands revised from 2032 to 2036.
On the debt side, on a full year basis, our gross debt has reduced by INR [ 602 ] crores, and the closing debt as on March 31 stands at INR 3,130 crores. The net debt-to-EBITDA as of 31st March was negative 0.6x.
With respect to CapEx, we have spent close to INR 1,900 crores during FY'22 and our budgeted CapEx spend for FY '23 is in the range of INR 2000 to INR 2,500 crores. In line with our capitation allocation framework and our vision to build a pure play cement company, the company has successfully completed restructuring of Refractory business.
Regarding legacy holding of the shares of Dalmia Bharat Sugar, we have, during the quarter, taken on an accounting call where under Ind AS 109, the investment, which needed to be fair value has been revalued accordingly, and the corresponding gain and loss has been adjusted through the other comprehensive income. At the same note to this effect has been given in the financial results.
Also in line with the capital allocation framework, the Board has proposed a final dividend of INR 5 per share, which is subject to the approval of the shareholders in the ensuring AGM. This is in addition to the income dividend of INR 4 per share, which was paid in October 2021. The total payout of dividend for the year works out to INR 169 crores compared to INR 25 crores paid for financial year '21.
The Board has also decided to induct M/s Walker Chandiok & Co., a member firm of Grant Thornton Group as Statutory Auditors in the operating subsidiary companies also, except in Calcom where Deloitte will continue to be the auditor and M/s Chaturvedi & Shah will continue to be Joint Statutory Auditors in Dalmia Cement Bharat Limited. The appointment of Walker Chandiok & Company as auditor is subject to approval of shareholders of respective companies in their AGMs.
We will continue to work towards strengthening the balance sheet further and ensure that while we improve our operating performance, we also ensure implementation of best accounting principles and practices.
With this, I now open the floor for question and answer. Thank you.
[Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.
Sorry, can you hear me?
Yes.
A couple of questions. First, on the cost front. So overall, very good cost management during the quarter. I just want to understand what sort of cost inflation do we expect in the coming quarters, especially on the variable cost side on the coal front?
And second, in 4Q, just some clarification. Maybe the diesel price was relatively flat. What led to almost INR 80 increase on a per tonne basis for the freight cost?
If I may answer that.
Sorry, I was on mute. Yes, Sumangal, I would say that still the pet coke prices are at the level of 250 or so and the imported coal value is also very high. So it looks like that the cost may go up to some extent in this quarter also and maybe another quarter also. It's difficult to predict at the moment. But of course, our journey to amount diesel fuel will continue and makes mitigate the cost increase. And on this cost of freight, rising cost, yes, we had -- we got the high quantity, we had built some quantity by rail and some more aspects were there on account of which this freight cost has gone up, but we are confident that we'll be able to maintain the yearly cost and cost.
Okay. Okay. So just on the coal cost, I mean we can see it is quite strong. But April has already gone and we generally maintain 30, 40 days of inventory. Is it possible to share some more quantification on the cost inflation that we are seeing at least for 1Q?
I would say that prices of coal in our case would be around $220 to $230.
Okay. Second question on the CapEx and the expansion. I missed what are you budgeting for FY '23 as far as CapEx is concerned. And overall, we had announced almost a INR 10,000-odd crores CapEx last year. And there has been -- there should be some cost inflation on the overall spend as well. So for us to complete this 48 million tonnes of capacity now, what estimates are we running there?
For the year FY '23, we are expecting that we should be able to spend INR 3,000 crore to INR 3,500 crores, which will include some ROI CapEx also, but mainly on the growth plan, and we are quite confident that CapEx in FY '23 and FY '24 would take us to 48.5 million tonnes by March '24.
The next question is from the line of Mayur from HDFC Life Insurance.
[indiscernible]
Mayur, your voice is coming a little muffled. Can I request you to speak through the handset?
Can you hear me?
Yes.
One of the questions already answered, which I wanted to ask. Just another one is for the WHRS and the solar capacity, which we are adding in FY '23. It's a bit aggressive one which we see in your presentation. What are your kind of cost savings that you are estimating in coming years because of this segregation of power?
I would say the difference or the delta between the power rate which will come either from CPP or grid and the WHRS and solar would be ranging from, say, INR 6 to INR 7. So accordingly, that will make the impact.
Okay. And any additions after that, basically, if you can get some idea of what is the CapEx that we are doing in FY '23 and maybe in FY '24? Also where we can expect basically in next 2 years, this total capacity of power going to?
Like in FY '23, we will be adding about 41 megawatts of WHRS. And on solar part, it will be about 66 megawatts.
Yes, sir, that's there in the presentation. I'm asking about '24. I mean you must be having some long-term plans for this, right ?
Yes, from WHRS point of view, I think we'll be completing all of our projects. All of our kilns will be treated with WHRS after where we have the requirement of waste heat. And on solar, yes, gradually we will ramp up.
Yes, to be specifically your -- the FY '23 savings are close to about INR 130 crores, which you expect from this power. And also in FY '24, close to INR 30 crores.
Next question is from the line of Indrajit from CLSA.
Two questions. First, we have seen large inflation across all construction materials, be it cement or to an extent, lesser for cement, but more for steel, PVC, et cetera. Are you seeing any impact on [ IHP ] demand as a result of that mainly on the Tier 2, Tier 3 or rural regions?
I would say that, yes, there is a little interest and more particularly, people are quite apprehensive about prices of steel to some extent maybe in Tier 2 and Tier 3 cities, it will be adding impact. And another impact may also come because of the interest cost may go up for housing loan but this is what is very gentle inflation.
So would that change our like FY '23 industry demand assumptions in terms of growth in any way? Or do you think we are still on track to do high single-digit kind of demand growth for the industry for the year?
With our investment is certain leading agencies, what we understand is that the growth demand is projected between 6% to 8%. And we expect that our growth will be better than that.
Indrajit, If I can add, Rajiv here. So, I think, it's a bit too early to say how inflation is moving, in fact, the housing demand. Because housing demand has been kind of muted for the last few years and there's a lot of pent-up demand after the pandemic. So there is going to be balance, the inflation is on the constrained because of a lot of geopolitical issues also. So depending on how that plays out, I think it's too early in the day to predict as to how it will impact. But honestly, to ask us, given where we stand as a country in terms of our growth trajectory. And I think -- even if there is mild inflation, I do not see any impact on the demand for infrastructure spending or for housing or other things. So we are working on that model right now. Our assumptions are that we have to see strong cement demand and .
I agree with you, Rajiv.
Sure. This is very helpful. And I just want to clarify one number. So for 4Q our coal cost was blended $181 and the spot prices that we are procuring all inventories $220 to $230. Is that correct? Or there is some mistake in my understanding.
Broadly its correct.
The next question is from the line of Girish Choudhary from Spark Capital Advisors.
Firstly, how are you thinking of inorganic opportunities. There were media reports of Dalmia bidding for Holcim assets. So in terms of balance sheet side, how will you address this? And as a follow-up with the second largest group also changing hands, how do you see the dynamics change for the industry and then for you specifically and also your read on the valuation?
Rajiv?
Yes. So see, there have been media reports about Holcim wanted to sell their stake in Ambuja and ACC -- and I would say that it's a great news, its great assets to the company is well done. They are large players in the country, cement is good. What gives us a lot of confidence and also actually excites us is the fact that there are so many new players who are new to cement sector also looking at these companies. So the fact that they're looking at investments in cement and ACC and Ambuja are not cheap assets. They are looking at investing in this sector. It just shows how important sector is for in the next couple of decades for India and what their expectation on this sector is basically.
So it gives us a lot of confidence in terms of our growth trajectory, 110 million to 130 million tonnes. And we achieved our position in sector there is going to . There will be a lot in the country. And any level of conflictions in the industry will definitely change and also be able to command prices and other input price inflation to the customer.
So on the news of Dalmia looking at it, I think it's all media speculation. I would not like to comment on the media speculation. We have a very active remediation function which looks at all the opportunities come our way and ACC and Ambuja as a part of that should get evaluated. But again, we are not commenting on specific things.
Question of how we'll operate in the balance sheet. I think that is for the we worked out as well as a second opportunity. So at this point I cannot comment specific on this opportunity.
Got it. Secondly, if you can just talk about the Murli asset ramp-up, how is the ramp-up like? And what is the cost structure or profitability of the asset, let's say your average of profitability at the company level.
Well, I would say that our team has been able to commercialize this project plant, which was closed for years and years and had a lot of problems. But then we could first restart it and then we could start -- commence the production also in January. Now ramping up, then we do expect that capacity gets now to 60% to 70% during the year FY '23.
Cost has gone up mainly on account of energy prices. But otherwise, on CapEx front of various operating parameters front, in a year's time, it will be almost equivalent to what the Dalmia Group's best figures are.
Okay. So one can expect more than INR 1,000 per tonne level will be earned from this asset? Is that the understanding?
So it will be the function of prices in the market, the energy costs that will decide. But at the same time, we have got -- we have the incentive available with us, like what Mr. Dharmender Tuteja has highlighted. So that will help us in getting the right EBITDA.
Got it. Lastly, just on the capital allocation front, it's been a wise thing to partly offloaded the IEX stake. So any thoughts sort or time lines on the remaining part of the investment?
This has been reviewed and of course, at the appropriate time, certainly calls will take us to offload as a benefit for it. That's the timing we cannot comment right now.
See, if I can just add, see IEX is a public company and we're also a public company. So I cannot comment on the time line. But I think we have clearly demonstrated our intent to offload all the benefit and if particularly look at it, we have done the Refractory business restructuring, Dalmia Sugar also has got share value. So I think in terms of the journey, I think we have fully committed journey. I can't comment on the time line [indiscernible] but we are net debt to EBITDA negative 0.6.
So as when we need the money for expansion, and you are going to have to ensure that we have a good leverage on the balance sheet for the weighted average cost of capital comes down. So I think we can see many factors, we will take the right call on the timing part. But definitely, we are committed to making [indiscernible] company.
The next question is from the line of Pulkit Patni from Goldman Sachs.
Sir, I just wanted to understand with this change of hands at Holcim, do you think it changes anything for the industry and for us? And related question is, our talking about sort of hiatus in capacity expansion after 43 -- after reaching the 48, which itself is substantial, I don't deny. Has that got anything to do with this change of hands at Holcim. So if you could address both of those.
Singhiji, do you want to or I...
Rajiv, you go ahead.
Okay. So will it change anything in the industry dynamics? I think, will depend on 2 factors if it is bought by media report their cheap tricks as we understand right now. So for example, happened with the UltraTech, it will lead to more consolidation in the industry, right? We'll have to offer the asset because from CP asset ] we have to see how it plays out.
If say, for example, any player buys this asset, and depends on because they're going to leverage their balance sheet, they also want to look at. It's not a cheap assets, it's an expensive asset. What does it mean for the pricing in each of these sectors or each of the deals of it? So I think this will definitely change some of the dynamics. Very difficult to comment on exactly what will happen because it will a lot depend on the price at which it is bought, who buys big and what their future state is going to be on this company. So I think it will be too early to be able to comment on that at this point of time.
In terms of what you said we have for the shortfall. I think many factors play into it, right? There's too much volatility in the energy prices. The world doesn't seem to be the same place as we saw it probably about 4, 5 months back, right? There's a lot of geopolitical tension, China shutdowns, supply-chain disruption, inflation going up, which is .
And on top of that news of consolidation in the industry. I think the main factors which are considered when you look at holistically [indiscernible] so while you're committed to 100 million to 130 million tonnes we still believe in the vision, and we are working towards that. I think you decided to just delay our announcement and if you look at it, we've also been trying to tie up our raw material securities bit of coal blocks, bit of financial blocks. So in line with our strategy, we are already taking a lot of steps, but I think we just decided it's going to delay the announcement of further expansion beyond 38.5 because we want to see what happens on some of these macro factors and also in the consolidation view. And then it will be the right time to announce and if you have to publicly have strategy, then we will be looking that also. So I think it was just we felt it's too immature to announce anything at this time.
The next question is from the line of Ritesh Shah from Investec.
Sir, my question was pertaining to the capital allocation framework that we had announced in March-July. You had indicated target ROCE of 14% to 15%. And you had also indicated that basically, my question is, -- is this number the same basically if you had to look at any inorganic opportunities? And I think there was also an asterisk which was put on the target net debt to EBITDA, which is less than 2x that there could be a deviation in case of any inorganic opportunity. So just wanted to understand 2 numbers, ROC and net debt-to-EBITDA, if at all, for any inorganic opportunities if you have to chase.
No, absolutely, Rajiv here. Let me take this and then ask Puneetji to add further. When we spoke about our ROC, I think, we believed this sector would deliver a ROC of 16 and there is no data point that I'm seeing which seems to be [indiscernible] takeout the volatility as we go along because, for example, the energy prices are so much that impact return on cash flows and their returns. And to that extent, we will see [indiscernible] but on a long-term view, if you ask me, I think 14% to 15% is what we're working towards, and I think it has to be gettable.
The question of what happens in case there's a large M&A opportunity which comes, we reiterated that last time also when we announced the policy. See, over a 10 year period, we have committed to [indiscernible] for any reason suppose there's a great opportunity which comes our way in terms of acquisition opportunities, just because we have announced a net debt to EBITDA of 2. Doesn't mean that we'll start giving up some opportunities and we like the competition.
So in terms of M&A, when you look at the long-term strategy, there are only 2 things at play. The capital allocation framework helps us and defines what we want to do, defines our intent, but there would always be a few exceptions to it. And the whole idea is that we make exceptions, we come out to everybody see that these are the reasons we have made an exception and these are the reasons why you had to do it -- go ahead, find some come back to with a framework. So I think the idea was to create more transparency and also create boundary connections as to what fit it, but it doesn't -- we don't want to tie our hands and legs and say that because this is a policy that and we cannot do anything beyond that. Because as I told you in the last year we announced this, I believe that this sector will see a lot of consolidation because we still are fragmented market, the top 5 players only have about 54%, 55% CapEx -- the shares. And I think you will see a consolidation dependency.
We don't want to shut our eyes to an opportunity to come to our way because we also have a planning division. We also want to be a reasonable sale market that we operate. So if this helps to accelerate the journey of course we will.
Very, very fair. Sir, my second question is more from an industry standpoint, like we had hear what is your view over here. Sir we have been quite upbeat about the demand prospects in the country. But given the diesel rates, the energy basket has been moving up and also the construction costs, how do you see the impact of price elasticity of demand? Like will it have a wiring on demand? And if so, what impact it could have overall on the pricing environment because both the demand and pricing are both critical. How do you look at the scenarios, say crude hypothetical remains at $115. There is price elasticity of demand, that is something which is real. So how do you balance the 2 variables? Just very hypothetical situation, but if the situation had to continue for the next 6 months, how do you utilize that?
Let me just give you my high-level thoughts. I think based on what we have seen in India so far, the -- even if cement prices move in the band of 20%, 30%, there is no elasticity of demand. So demand doesn't go up as prices come down and it doesn't fall because prices go up in the band of like, let's say, 20%, 30%.
If I look at the current situation where most of the building material prices have gone up, cement hasn't gone up that much much. But we are not seeing a drastic demand contraction yet. In fact, I was even seeing the rural economy, Mahindra & Mahindra numbers were for April. Their tractor sales were like 50% high on a Y-o-Y basis, almost like 89,000 tractors were sold. So I think I'm seeing good signs in the rural economy.
I am also -- even though March quarter is a good quarter, our Y-o-Y growth in March has been 16% as opposed to the whole year being 7%. So partly seasonality. But I think demand is going to be reasonably strong. I also think that inflation is here to stay. There could be some changes in the geopolitical scenario if the war gets over and depending upon how the Central Bank decides to balance growth versus inflation.
So I'm a little cautious about our ability to pass on the cost spike fully. And, I think, H1 is going to be tough compared to last year because last year, H1 was quite strong. And I think H1 is going to be quite difficult. But H2, hopefully, things should be better than H1.
But on the volume side, I'm not seeing the significant headwinds. I just see like last year growth was 7%. I think this year should be better than last year for sure. And -- but on the cost -- on the margin side, I'm cautious. I'm very cautious. I think so far, there is a lag in terms of how much we can pass on and how soon we can pass it on. And I think that condition remains challenging for the next 6 months at least as I see it.
That's very useful. Just last one question for Singhiji. Sir, you have done a phenomenal job on green fuel, I just wanted to understand on a rupees per Kcal basis, how should one understand that -- is it -- does it look good on the overall rupees per Kcal for the fuel cost? Or is it like you are chasing ESG and hence you are okay to spend little bit more for ESG?
It will be always economical as well broadly to be stable, and it will be maybe 30% or something lower than the fuel prices. But it all depends somewhat on other fuel prices. We are spending money for the like plants and machinery so that we can use it in a right way, as well as we are also able to avoid usage of coking fuel, which also helps us in bringing down our carbon footprint and making the globe better.
The next question is from the line of Amit Murarka from Axis Capital Limited.
So my question is on the capacity commission schedule. So you've shared it for WHRS. Could you also lay it out for the cement expansion from 35.9 to 40 and then to 48.5?
Yes. Like we said earlier, our capacity of cement would be 40 million tonnes by March '23. And then rest would be commissioned in FY '24, so that we become 48.5 million tonnes cement company by March '24.
That I understand. I was just like wanting to know if it is possible to have a 1H, 2H breakup just as you've shared for WHRS and solar.
So balance, maybe 0.6 million tonnes would get added in the next 3 months in cement. And then balance would be the second half for the year FY '23. And in FY '24, maybe 2 or 3 million tonnes may get added in the first half, balance in the second half.
Okay. Got it. And just another question on capacity utilization. So it was about 65% in FY '22, which is actually lower than industry and you have another 35% expansion lined up. So how should we think of capacity utilization rates in that context?
We are expecting that we should be able to do better in our volume and compare them to overall industry both in South region as well as East and Northeast, and that may help us in improving our capacity utilization. And we are quite hopeful that in time to come, the growth of cement in India would be better in years to come and this growth will help us in better capacity utilization. Difficult to commit to some number, but then yes, it will go on year-by-year.
Okay. Sure. And just the last question. which is on Murli. You mentioned that it will ramp up to 60% to 70%. But what would it be operating at right now?
Say around 55%, 60%.
The next question is from Shravan Shah from Dolat Capital Markets.
Sir, a couple of data points. First of all, trade nontrade share for this quarter and for full year and also the lead distance for fourth quarter and for the full year.
Dharmender or Aditi?
Yes, yes. So actually for the quarter it is about 65%. And on the lead distance for the quarter, we are at say 218 kilometers.
Okay. So the lead distance has gone up versus last quarter, it was 298, so 318. So that would be the reason in terms of the increase in the freight cost.
That is one of the reasons, yes.
Sir, the other question is in terms of the -- just trying to clarify me if I'm wrong. The CapEx total plan that we announced was INR 8,500 crores to INR 9,200-odd crores. So out of that, how much already we have done till FY '22. In FY '23, we have said INR 3,000 to INR 3,500 crores, we are going to spend. And out of that, roughly what -- in terms of the WHRS and solar, how much are we spending in the FY '23?
Dharmender?
Yes, FY '22, we spent about INR 1,900 crores. And FY '23, as Rajiv stated, is about INR 2000 crores to INR 2500 crores. And FY '24 another about INR 3,500 crores to INR 4,000 crores, balance will go in the coming year, which is although the cost that's impacted, but cash flow-wise, just refer to slightly later after the commissioning also.
Okay. Okay. The other question is in terms of -- in the previous question you have answered. If you can help us slightly better in terms of the upcoming capacity which is there. So you said 0.3 -- 0.6 million to come in the next 3 months. But if you can open the presentation on Page 7. And if you can help us would be better, which region would be coming in FY '23 4 million tonne that will be coming 4.1 million and next capacities. So that would be helpful because there is not much clarity on that part.
I may answer that. All of greenfield and brownfield will come in FY'24, the 4 million tonne of cement expected in FY '23 is spread across regions [indiscernible] for that you can commercialize exactly part of this main debottlenecks in the first half.
Sorry, Aditi your voice was breaking. If you can repeat again, the I got greenfield and brownfield will come in FY '24. So that is 3 million and 1.7 million tonnes will come in FY '24 and the rest...
And the 2.5 million tonne of Bihar will also be in FY '24. The rest that comes in during FY '23 is the debottlenecking, which is across the plant.
Right, right. Okay. Okay. Okay. That's it from my side -- sorry, last one, in terms of the price increase in this April versus the third -- fourth quarter average, how much we have seen the increase on an average?
I would say there has been a somewhat price increase on account of what in results East and Northeast. But there's hardly any price increases out in East. The price increase must be different in different estate from, say, INR 10 to INR 20.
Okay. So East only INR 10 to INR 20 increase we have seen versus from the last. And South, nothing, no increase?
You're right.
The next question is from the line of Navin Sahadeo from Edelweiss Financial Service.
Yes, am I audible?
Yes, you are.
All right. My question was on the CO2 emissions. So for the year, you said we have done about 489 versus, I think, we were at just about 492 last year. Our target is to, I think, go up to almost 373 by 2030, which implies a very stringent target of a reduction of 3% CAGR. This year, it's less than 1%. So in the context of blending ratios that we were trying to improve, where are we? And how do you see this CO2 per tonne reduction road map?
So 2 things. One, since we have started the old plant of Murli as well as old plant of Kalyanpur which is DDSPL on that account those 2 plants, CO2 emissions were higher in comparison to our call modernized plant. And that's why this year, we could see only the little improvement in CO2 reductions. And now already all actions have been taken for bringing down the CO2 emissions in these 2 plants, which we'll be able to see results in the next 2 years. That is one.
And secondly, on making low carbon cement or the blended cement actions are on, and then we are quite hopeful that we'll be able to make good inroads more in next 2 years.
Sir, if you have the blending percentage handy with you or I could take it later.
Okay. 78%.
78%, okay. Okay. My second question then was about this alternate fuel or green fuel, as you call it, and very commendable improvement there from 8% to 16%. I wanted to understand, typically, if you can quantify the savings that it would have generated in this journey from 8% to 16%. That's one part of the question. The second is, as we try to increase this use of alternate fuel, technically, and I could be wrong. But technically, there is usually some hit on the output of the kilns typically that happens. So first of all, are we working towards any sort of upgrades? Or does it further require any modernization or upgradation to increase this usage further to, let's say, 20%, 25%? And how geared or prepared are we on this front to handle that?
Yes. First, let me tell you that whenever we take up such projects, then we do try to understand technology possibilities as well as the people changing. So we have done both, and that's why we have been able to ramp up. Initially, when we start using at higher percentage output in fact, does come. But then with various improvements in the processes also as well as stabilizing of the equipment which we put in, we are able to manage that. And I may tell you that we have become the first in the industry to put up chloride bypass system. On account of this also, we could use more and now industry is also following. So that's also a good part. And we are hopeful that with all assets which we have taken for one; training our own people, getting the right material and third, putting up the right plant with the technology, we'll be able to use a higher percentage.
Sir, I appreciate savings.
Savings ? So for the full year, it will be close to about INR 200 crores. And the last quarter itself could be around INR 90 crores.
Full year, INR 200 crores. Last quarter, INR 90 crores?
Yes.
Next question is from the line of Prateek Kumar from Jefferies India.
My first question is on the expansion after post FY '24 which you said is a pause as of now. So does this -- I mean, as I understand, these expansions were in North and Central markets. So does this impact -- or like I mean there was this change in the MMDR act for which I think we were looking to expand faster for our lease rights. So does anything change on that front?
First 48.5 is concerned, this is all in our existing region where we have all right resources. So there is no impact on that.
No. So I'm asking beyond 48.5.
Yes. So that we are exporting various opportunities, and we have been also able to get few blocks also like 1 block in Rajasthan, which was highlighted in last call, so both actions are in process and surely, when we quantify and concretize, we'll share with you.
Secondly, what will be our fuel mix right now? And when we say that our fuel mix -- what will be our fuel mix right now? And when we say that our cost of fuel went up from 158 to 181, does this also include some implied domestic coal and greenfield prices? Or is just for imported coal?
So this price is in relation to the pet coke which we consume India and imported -- as well as the imported coal.
The fuel mix is primarily pet coke quarter is around 64% and rest of the fuel other than pet coke if i remember is 36%. And this will be quite [indiscernible] depending on the prices of imported coal or pet coke as well as the availability of Indian coal.
Okay. So 36% includes domestic coal and imported coal both?
Yes. Yes, yes e]
Okay. And my last question, sir, when you -- while you alluded on year-on-year growth for FY '22, like south through double digit is for small decline. Can you highlight the same for like for 4Q?
For?
For fourth quarter, how did the South and East region perform when you had like a 3% growth. So how did the regional performance was?
So I would say that we have done better in South and Northeast. And it yes, we could recover the losses which we had in other regions.
Thank you very much. Ladies and gentlemen, we'll take that as a last question. I now hand the conference over to Mr. Dalmia for closing comments.
Hello? Sorry, I'm unable to hear the voice is not clear, sorry.
Sir, would you like to give any closing comments?
Yes, yes, yes. Okay. Thank you. Thank you, everyone, for joining the call. I think we are ending on a good note in a tough year. And I think as we step into the next year, there is a lot of action in our sector and some headwinds continue but I still continue to remain quite bullish. Our expansion plans are on track, even though there is inflation, and we continue to believe in this sector, and I think the best is yet to come.
Thank you again for joining, and thank you for all your feedback. We look forward to continued engagement with all of you. Thank you.
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.