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UltraTech Cement Ltd
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Ladies and gentlemen, good day, and welcome to the UltraTech Cement Limited Q3 FY '20 Earnings Conference Call. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risks that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent development, information or events or otherwise. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Atul Daga, Executive Director and CFO of the company. Thank you, and over to you, sir.
Thank you so much. Good evening, everyone, and welcome to this call to discuss UltraTech's Results for Q3 FY '20. Better late than never, wishing all of you a very successful and eventful 2020. I think too much is happening in the country and around the globe and in all this confusion, the growth story of India has actually taken a beating. But let me start by sharing some good news. We have started seeing improvement in demand from few geographies in the country, with states like Orissa, West Bengal, Jharkhand, Bihar, Tamil Nadu, Kerala, Telangana, Maharashtra, Rajasthan and MP turning around, and this covers a lot of territories. The best thing to happen is the restart of work on the Polavaram dam, the biggest irrigation project in the country, and several other irrigation projects have been reawarded by the AP government. Clearly, the government is concerned on the depressed state of the economy, and I'm sure where there is a will, there is a way. The Honorable Prime Minister has identified and chalked out a detailed program of driving growth, and the cement sector is totally going to benefit with the thrust on infrastructure. You all would have read about the Task Force on National Infrastructure, where pipeline has been identified in different segments for spending about USD 1.5 trillion till 2025. Of course, the pipeline has -- this work that has been identified has to actually get awarded and start execution. In real estate segment also, there is a 25% growth during second half of 2019 for launches in number of -- launches of number of housing units in top 8 cities in the smaller and lower ticket sizes. Unsold inventories dropped about 13% in calendar 2019 versus the previous year. And we are, as I mentioned, seeing new launches. This should help in the overall pickup in the real estate demand in urban areas. Let's now talk about cement prices. During the quarter, prices dropped on an average about 4% compared to Q2; however, they still remain higher than last year. Prices corrected mainly in East, South and Western markets. In some markets, prices have started picking up as we speak during the current month with improving demand sentiment. And how are the costs doing? Please don't be alarmed seeing a higher amount of other expenses in UltraTech's P&L. Let me first tell you about the exceptional items which have been charged in the P&L during this quarter. INR 133 crores has been provided against the disputed liabilities offered under the amnesty scheme called Sabka Vishwas, introduced by the Central Government. This amnesty scheme, as you might be aware, is for service tax and all other indirect taxes up to June 2019. We've examined our various pending cases, and the gross liabilities involved against the settlement that we have taken is INR 832 crores. All these liabilities are in the nature of contingent liabilities, show cause notices and cases which have been going on. We thought it is better to focus the management efforts on productive work instead of spending time and effort on running around [ to ] courts and legal authorities. To my mind, this will give us a lot of peace of mind, and we can do more productive work. As I mentioned, INR 832 crores worth of contingent and disputed liabilities have been settled by way of payment of INR 133 crores. Sorry, the payment will be made by March 31, 2020, the provision has been made in this quarter. Another onetime expenses, an amount of INR 31 crores, which was incurred for the acquired Century plant has a onetime exception cost as part of our process of integration and alignment with our company accounting policies. Both these items have an impact on operating EBITDA to the extent of nearly INR 82 a ton. As for the transition costs or upgradation cost at Century plant, we will further have around INR 30 crores of spend in the current quarter as part of the integration program. Getting further into detailing the costs, energy costs, they have reduced about 6% linked to drop in fuel prices. During the quarter, we have consumed petcoke at about $80 a ton as compared to $91 a ton in the same -- in the last quarter. Spot prices of petcoke are hovering around $70 and U.S. coal is around $80 on a landed price basis. The benefit of these prices will surely reflect in Q1 FY '21. However, we are all aware of the IMO's guidance on -- IMO's ban on bunker oil being used as shipping fuel. Whatever we know of, most of the chartered ships are switching to low sulfur fuel oil, which will lead to an increase in their cost and thus the ocean freight. This means that we might not see significant fall further in the landed cost of fuel going forward. It will be important to talk about green power. In our total power requirement, the share of green power is increasing every quarter. During this quarter, the green power constituted about 12.7% of our total power requirements, up from 10.5% in the last quarter. This excludes Century assets. At this mix, the company is reducing about 5 lakh metric tons of fossil fuel on an annual basis on a current capacity utilization. Logistics cost, which is the biggest cost for cement industry. Railways extended the benefit of exemption from busy season surcharge till June 2020, which has helped maintain the logistics cost at the current level. The recent hike in passenger fares seems to have been absorbed very well in the system, giving us hope that there will be no increase in rail freight for some time. On the other hand, road freight rates have gone up due to hike in diesel prices. Synergies between existing plants and the acquired assets have helped reduce our lead distance by about 2% as compared to last quarter. As the capacity utilization of Century assets ramps up, this benefit could increase further. During the last quarter, there were several questions about the Century Cement asset performance. We had just taken it over and I could not have -- I did not have enough details to tell you. So now let me tell you about the progress of integration of Century assets. The assets are fast turning around. For the month of December, not the quarter, for the month of December, we have achieved a capacity utilization of 79%. This has been a month-on-month ramp-up with average capacity utilization from these plants touching about 55% for the quarter. You'll appreciate that it takes time to convert category B brand into category A brand in the same market. The dealer community selling a category B brand takes time to change their practices and our team is on the job. For the month of December, with a 79% capacity utilization, of the 14.6 million ton of capacity of Century assets, we have achieved 55% brand transition. And this will reach upwards of 80% by the end of September '20. We are tapping into various synergies in operations, manufacturing costs and overheads. Today, the production costs are higher by about INR 425 per metric ton from our neighboring plants. This includes the structural cost increase of INR 70 per ton towards MMDR royalty and about INR 125 per ton being exceptional costs. We expect to have a complete alignment in costs with UltraTech costs by the time we complete the transition. We have been rapidly converting the Century brand into UltraTech and are confident of a complete switch in 12 months, since we started managing the operations by September -- from 1st October 2019 only. And this acquisition, in my view, will start generating an EBITDA per ton in excess of INR 1,000. Hence, it will not be relevant to look at the current quarter's performance as a steady-state performance for the Century acquisition. Next, it will be worth mentioning about UltraTech Nathdwara. I think it has achieved nirvana, generating an EBITDA per ton in excess of INR 1,500 at a capacity utilization of only 60%. The production costs are in line with our existing plants or better than some of the plants. They will improve further with the commissioning of a 10.5 megawatts WHRS plant by March 21. This will be our 11th WHRS unit. With improvement in demand, my guess is that the unit is poised for bigger wonders. Talking about WHRS, we now have a total operating capacity of 103 megawatts and another 39 megawatts is under implementation. During the quarter, we completed the sale of a grinding unit of 6 lakh metric ton in Bangladesh at a EV of USD 30.2 million. Our cash flows on CapEx till December 2019 were INR 1,150 crores, and we expect it to go up to INR 1,600 crores by the end of fiscal 2020, as against our earlier guidance of about INR 2,000 crores, thus saving us INR 400 crores of cash flows. Orders have already been placed for the 3.4 metric ton grinding capacity expansion in the Eastern markets. Cuttack will be a greenfield capacity. And 2 brownfield expansions, one at Dankuni in West Bengal and the other Pataliputra in Bihar. All these 3 plants will be for composite cement. We expect to commission this expansion by March '21. I'm happy to tell you, and you would have noticed from the stock exchange release yesterday, that we have finally been able to commission the Phase 1 of Bara grinding unit, which was purchased as part of the deal from JP Associates. Talking about the JP transaction, Dalla Super unit, which is a 2.3 metric ton clinker plant is expected to commission by March '21 after completing all legal formalities. There is a delay, however we are fully covered on our existing clinker requirements. Having given you an overview of the cash flows that have taken place and what lies ahead, on the basis of 12-month performance, our net debt-to-EBITDA is at about 1.87 on a consolidated basis -- consolidated balance sheet, including the Star Cement UAE. We have reduced our net debt by about INR 3,486 crore during the first 9 months of this year. I'm happy to tell you that our ROCE for the trailing 12 months has increased to about 11.2% as compared to 8.9%, and ROE has improved to 10% as compared to 7.3% as of March '19. These numbers, of course, have to be looked at taking into account the front-loading of the investments that we have made. We have a lot of capacity available. And I'm sure there are interesting times ahead, and UltraTech is in a unique position to tap the opening up of the markets going forward. Thank you so much for listening to me, and I hand it over to you for further discussions and questions.
[Operator Instructions] The first question is from the line of Bhoomika Nair from IDFC Securities.
Thank you for the detailed opening remarks. So I just wanted to understand Century a little better. We've clearly seen an improvement in realizations, and we are making the brand transition. So just wanted to understand what has been the average realization improvement on a per ton basis for Century? And if you can give some color on the EBITDA for the asset?
Improvement in realizations would be -- do you have a percentage? So right now, I think we are more focused on brand transition and hence marginal improvement only. Prices will start falling in line with UltraTech from January -- January-March quarter. And as far as EBITDA per ton is concerned, operating EBITDA, excluding onetime costs, will be about INR 267 per ton.
Okay. So in that sense, so as we move ahead, there will be a continuing cost of the INR 70 and INR 125...
No, no, only INR 70 product, which is the MMDR royalty and the onetime costs, which we incur about INR 31 crores in this quarter, I might have, give or take, INR 25 crores to INR 30 crores in the January-March quarter. So that should be the end. And then from April onwards, we will have only the INR 70 as an except -- I can't call it an exception, it's part of business, so.
Okay. And so by then is when we are saying that, that we'll hit the number of INR 1,000 EBITDA per ton from sometime in 1Q? Would that be a fair understanding?
Absolutely.
Okay, okay.
With capacity utilization in excess of 80%.
Got it. Got it. Perfect. And as and when the balance is transferred or the balance of brand transition happens through the course of FY '21 and also the Baikunth plant shifts over at a later stage, the EBITDA per ton would broadly improve in line with the realization?
So when I told you that we will have in excess of 80% brand transition completed, I had excluded the Baikunth plant. Baikunth plant will continue for strategic reasons to sell BIRLA GOLD or the Century brand for some time. Ultimately, the team is firming up the view that we will have to put up a fresh line -- [ rail ] down that line and put up a fresh line unless there is some other technology or improvement possible to improve the quality of cement coming from that plant. So out of the 14.6 million tons acquired capacity, 12 -- Baikunth is 2.4 million.
2.4 million.
Baikunth is 2.4 million, 12.2 million tons would be 100% UltraTech. And this 2.4 million will continue for some time as the old brand. It sells in Chhattisgarh market only, which is a very low-price market.
Understood. Understood. Sir, just second question is on the volume. You gave some color that...
We gave all the color.
Yes, so just wanted to get some sense on just real estate. How is that part? You talked about infra being a key driver for demand. And if you can just throw some color on the real estate activity?
So whatever we have heard, and I gave a small glimpse of the knowledge that [ were key ], we are seeing an improvement in new launches in metro towns. Now new launches have to be looked at. They are not the luxury apartments. If I were to give an example of city of Mumbai, new launches in the ticket size of INR 1 crore to INR 1.5 crore are seeing growth as compared to the luxury apartments of anything above INR 3 crores or -- now those kind of apartments are just not selling and not too many new projects are coming up. We've been told that Mumbai has a surplus inventory for about 24 months and Bangalore, which is an interesting market, has an inventory of 8 to 9 months. Once this inventory becomes tighter of unsold houses, you will start seeing new projects rapidly surfacing. And with RERA in place, there is no way that there will be any delay in project execution. Whichever project gets launched under RERA will see project execution also on time, good for cement.
The next question is from the line of Apoorva Bahadur from Jefferies.
Congratulations on a good set of numbers in an understandably difficult quarter. So a couple of questions from my end. I wanted to understand, sir, something on this onetime settlement. So should we -- so is this once and done now? Or should we expect more such settlements in future? And also...
No, the scheme is over. The scheme got over on January 15?
15th January.
15th January, the government closed the doors for anybody wanting to go under amnesty. And this is nothing new. There have been several amnesty schemes which have come in the past period also.
Okay. And sir, how much would be the tax benefit? Because I think in your presentation, you had mentioned it'll between 40% to 70%?
That is -- INR 133 crores is roughly about 50% of the principal amount of the demand which was contingent or disputed. We did not -- since it was contingent, we did not make any provisions. So it's a direct charge to P&L. However, the contingent liabilities extinguished amounts to INR 832 crores. And the bigger point to note, Apoorva, is that -- so suppose some matter is pending in Supreme Court and the court prolongs and the decision is made 3 years, 4 years down the road, this INR 832 crores would have become INR 1,100 crores or INR 1,200 crores with compounding interest. So we thought it best to settle these cases and move on in life.
Of course, makes sense, sir. Sir, secondly, also on your -- so overall, your premium cement piece is increasing the volumes over there. So I just wanted to understand whether we are still maintaining those EBITDA margins of INR 5 to INR 10 per bag? And going ahead, do you see these margins being maintained? Or will they come under pressure as the competitive intensity increases over here as well?
No, no, no. So the premium products will continue to command higher EBITDA per ton.
So we are maintaining INR 5 to INR 10 per bag EBITDA per ton margin?
Yes. At EBITDA per ton...
Per bag, sorry, EBITDA per bag.
Almost higher here, actually slightly higher than that, but INR 10 is the same number for your calculation. And as volumes go up, the EBITDA per bag will also go up because of operating leverage of cost absorption.
Okay. Fine, sir. Sir, lastly, you have mentioned in your presentation that there was a fly ash price increase. I wanted to understand if this is seasonal or there's any specific reason? And how do you see the trajectory going ahead?
Definitely, it's seasonal because suddenly when there's a power plant shutdown, there becomes a scarcity in a particular region. And like slags that you had seen in the past where steel industry saw an opportunity, power plants have also seen an opportunity of making money in fly ash. Fly ash used to be negative cost maybe a decade ago. Now we have to incur a cost. So it's opportunistic and not necessarily seasonal. Some could be seasonal also, but more because of a shutdown in our power plant.
Okay. So going ahead, with renewable possibly there could be some increase over here as well?
Both ways. It could come down also. So we are doing -- with the size and scale of our operation, any power plant, big power plant would be more than happy to do a long-term tie-up with UltraTech. And we are doing those kind of strategic initiatives to lock in our costs.
Makes sense, sir. So lastly, if I could just squeeze in one more. So I basically missed out on your expansion part. So if you could just elaborate on that? The 3 plants that you're going to commission?
Why don't you miss out now also then. So 3 plants, total capacity is 3.4 metric tons, out of which Cuttack is a grinding unit at -- a greenfield, which is 2 million tons and 7.7 or 0.7 million tons each brownfield expansion at...
0.6 each.
Sorry, 0.6, not 0.7, 0.6 each at Dankuni and Pataliputra, this would add up to about 3.4, the 3.4 mtpa we should be commissioning by March '21. Total CapEx commitment, which I did not mention earlier, is about INR 900 crores something, INR 900...
INR 940 crores.
INR 940 crores.
The next question is from the line of Indrajit Agarwal from Goldman Sachs.
Congratulations for a good set of numbers. I just wanted to understand a little bit more on the transition of brand part. So if you look at the other 2 acquisitions, for example, the Binani and JP, we did at a much lower time, right, about 40 to 50 days. For this one, we are taking just slightly longer. So what is different this time around?
So if you start from December, then it is taking about 6 months. Because by -- in the quarter, April-June '21, we should be 80% -- we should be 100% of the convertible possible plants, okay? Baikunth is not possible, so you should count it out. So it's taking 6 months because don't count October, November, first 2 months takes time to settle the plants, people alignment, process alignment, et cetera. Now the bigger question, why is it taking so long? You need to understand the location of these plants. The Manikgarh plant, which is acquired, is 20 kilometers away from our existing Awarpur plant. The Baikunth plant in -- near Raipur is 35 to 50 kilometers from 2 of our existing plants in Chhattisgarh. Maihar plant is less than 70 or 80 kilometers from 2 of our plants, Bela and Sidhi. So these plants are -- and then Sonar Bangla, which is, of course, doing very well. It caters to the Northeast markets. And here we come in the Northeast markets with a big bang. All the other plants, since we are operating in the same market where we were already existing, there is a gradual transition. I cannot just uproot an existing brand and start selling under it. It is not a selling of a label. There is a convincing to the customer about quality, the benefits of a product that we are selling now as compared to what they were buying earlier. I don't want to lose the customer either, and I want to convince the customer to pay a premium. That's why it takes slightly longer. JP acquisition, if you were talking about, which conversion happened very fast, Bela-Sidhi plant in central market, which was our first entry in the central market. It was a virgin territory for us. So it was launching of a category A brand straight away and not a conversion. Similarly, when we went in as part of the JP acquisition Vizag market, we were catering to that market from Tadipatri plant, which is very far away as compared to this plant, giving us access to the industrial development and -- in that market. So we could launch our product and increase our volumes there. Then there is the Dalla plant, again helps us in the Eastern markets, easy transition, and Baga plant, which is up the hills in Jammu-Himachal. We were not present -- or we were present in a very small scale because we were supplying material from foothills, and it was exorbitantly expensive. So small supplies. Now we had an opportunity to launch big scale. We've been able to do that. Nathdwara, similar story, while we were present in Rajasthan market, we are present in Gujarat market, the location gives us advantage to split Rajasthan into 2 territories, and we have been able to cater to Western Rajasthan in a much more granular manner, which helps us capture the market. I hope I have been able to explain.
Absolutely. One follow-up. So for this Baikunth plant, is there any incremental CapEx that we'll have to incur?
There will be, there will be. Certainly. We haven't firmed up the plants. Once we do, we will let you know.
All right. One last housekeeping question. Can you help us with the working capital release in third quarter and 9 months as a whole?
Yes. So in the third quarter, basically, we have released about INR 834 crores, which is largely on account of inventory liquidation. And you know...
He didn't ask what account. So don't tell him that. About INR 1,000 crores of release of working capital.
The next question is from the line of Amit Murarka from Motilal Oswal.
Just a couple of questions. One, in the presentation, I see that you've mentioned that the trade sales improved by about 3% on a Y-o-Y basis this quarter.
Yes. Yes.
But overall, volumes have declined 4%. So can -- like, is this -- does this imply that basically your -- the institutional volumes or the infrastructure volumes were the spoilsport here and...
Yes, absolutely. And in a depressing market, everybody knows that infrastructure activity has slowed down. So our focus -- it was easy to focus on the trade market.
And what was the trade/non-trade split then in this quarter?
68% is trade.
Sure. And on the infra side, then as we see that some coastal projects are getting approved, Mumbai-Nagpur highway is going also. Do you expect a pickup in that segment then going ahead?
Yes, yes, very much. As we mentioned, I think that's the best part, that's the brighter side of life, that things are picking up. Now take the case of Mumbai and Maharashtra. Maharashtra, we are firing full throttle in both the plants, the Manikgarh and Awarpur plant now, with the Mumbai-Nagpur Expressway and coastal roads will also pick up. No cement consumption has started here, but it will pick up.
Okay. And also on the petcoke side, basically, the power fuel cost has come down this quarter, but the presentation mentions $80 as the consumption cost, whereas I believe the spot prices have been much lower. So like, again, can you quantify what kind of benefit can flow through on the 4Q also now on the power fuel side?
Well, I think I mentioned it, our consumption was $80. And if you're buying at about $70, a $10 differential, give or take $50 a ton in costs, would reflect in the next quarter.
Sure. And lastly, on the Bara grinding unit. So this is Phase I. So there's another 2 million ton Phase II here?
Yes.
So one, by when will this be commissioned? And secondly, what do you think or expect the ramp-up schedule to be over here, given that the Super Dalla clinker will come later?
So I clarified that we are not short of clinker. We will supply clinker from Sidhi where we have surplus clinker to Bara. And Bara will ramp up in the next couple of months of this 2 million ton capacity. The Phase II, I expect will commission by September 20.
Sure. But will there be enough clinker for Phase II as well? Phase I, I understand we'll have...
Yes, yes, we will have enough clinker.
The next question is from the line of Ritesh Shah from Investec Capital.
Sir, my first question is, when we look at our volume growth for the quarter as compared to the industry growth, I don't know what it is. Sir, how do you look at it? Are you happy with our volume growth on a year-on-year basis? I mean degrowth.
I think we'll perform better than the industry.
Sir, can you help what was the industry growth number? Basically, broad number should be helpful.
I -- difficult to pinpoint a number because there are -- it's a fragmented market, and there are so many unlisted players. My giving a number might send a wrong signal. So I would avoid commenting on that.
Okay. But if I have to put it the other way around, have we lost market share in any of the regions given the decline that we have seen? Or is it that the industry growth rate would have been -- industry degrowth would have been higher than what we have reported?
I don't think so. I think we have gained in terms of market share. There might be a district level number which I'm not tracking, but generally, overall, we have increased our market share.
And this would be across regions, right?
Yes, on an all-India basis.
Okay. That's helpful. Sir, secondly, just to continue with the prior question, you indicated that we have adequate clinker. Now this is despite JP Super, there being a delay over here and Phase I getting commissioned for Bara. And Century also had 1 million ton deficit to my memory. Sir, when you say we don't have a deficit, is it you're adjusting for the OPC, PPC, PSC mix and...
Absolutely. So that is taken care of, plus the surplus clinker that we have at Sidhi. And there's an inherent debottlenecking capacity which is available at the acquired plants.
Okay. So sir, how should we look at the OPC, PSC, PPC and composite cement mix for us, say, FY '20 and FY '21, just to have a better understanding of...
On a blended basis, when -- we are 68% today?
68%.
We are 68% on a blended cement. FY '21, we should be around 71% blended cement. Blended cement includes PPC, slag, composite.
FY'21. That's helpful. Sir, last 2 questions. Sir, on wall putty, what we understand is we have lost market share not giving discounts on smaller kg bags, 1 kg and 5 kg, and the peer set has benefited. And sir, this has been going for the last 6 months or so. Sir, any thoughts over here? One is, if you can give us some numbers over here on the top line and EBITDA that would be useful. And are we fine with this market strategy of losing the market share?
We want to maintain our price position. And there is a core market which we are catering to. I don't think the domestic players are gaining market share. It's more of the imports which are getting an advantage. Imports from UAE or the Middle East markets, which has found its way into India.
Sir, I was referring to wall putty. So I think...
By wall putty, you're referring to white cement, yes. Wall care putty, it's the paint companies which are gaining market share, I'm afraid. I think we are not wanting to compromise on our pricing position, and we will live with the situation as of now.
Okay. And sir, last question, incentives on the Eastern expansion that you indicated in the 3 phases, 1 greenfield, 2 brownfield. So have the incentives been firmed up, because what we hear is the states are going slow on doling out incentives? Sir, please correct me if I'm wrong.
Yes, states are -- you're absolutely right. Hardly any states have cash flows. Orissa, the policy exists, we will try for our incentives for the Cuttack grinding unit.
Okay. But sir, nothing firmed up?
Nothing firmed up. Nothing firmed up. And Bengal, I think it's really a dry state in terms of -- in our terms. So difficult to get incentives in West Bengal. Bihar has also announced a policy, Mukesh? Bihar also has an incentive policy where we will apply for incentives.
The next question is from the line of Tejas Pradhan from Citigroup.
This is Raashi here.
You'll have to be a little more louder, Raashi. Little louder, Raashi.
You had mentioned -- is this better?
Yes, better.
So you had mentioned that prices have picked up in some regions. And please correct me if I'm wrong that -- I believe that West parts of the South have not improved yet. But you also suggested that the dams and now the irrigation projects have started and the winter market demand looks like it's kind of picking up. So is this just a matter of -- like is this like a time [ issue ] before which we see price improvement across or the pickup North [ and more then with ] demand?
I couldn't catch. What regions are you hearing have picked up?
I said, has there been a price improvement in all of South and all of West?
No, no, not all, not all. For example, we have not seen in Punjab, we are seeing improvements in Maharashtra. We are seeing improvements in some regions in South. Rajasthan, we're seeing an improvement in North. East is growing so rapidly, showing double-digit growth again in this quarter. We'll start seeing price improvement.
So has the price -- so has this demand improvement that we're seeing in the South, that's not fully translated into price hikes?
Not yet. Not yet. I think you will start seeing -- my sense is that capacity utilization starts going up, you will start seeing price improvements.
And what would be the utilization in the South, like ballpark right now?
Current prices?
Utilization in the South.
Utilization. One second. Somewhere around 70%.
Okay. Okay. And just one more question on -- and not linked with the results. The Emami, what are the time lines that you are looking at? I know you have not bid, but what are the time lines on deal closure?
Guess what. And I hope everybody is listening. I did not bid for Emami. So now you need to discount all the news that you guys read in the newspapers.
Sorry, you said you did not bid?
Did not bid at all. And I would always be surprised what newspapers are reporting. The asset is of no interest to us.
Okay.
So there were some people who are worried about our cash flows, we are as conscious as you are about our cash flows.
The next question is from the line of Sumangal Nevatia from Kotak Securities.
Sir, first question, again, a little bit more on demand. Is it in the last 2 months more of restocking demand, or we're seeing actual project and real demand growth?
What do you mean restocking? Inventory never stops, Sumangal. So depot stocks or warehouse stocks would be 2 days, 3 days, they're small warehouses. So I don't know what you mean by restocking or...
No, generally, what we hear is in December, I mean, there was expectation of strong price increases in January. So...
[ Nay, nay, nay, nay ] I think there's -- you are misinformed. There's actual activity on the ground, which is taking off.
And this is from -- more from January onwards or December itself, there was a...
I would say December, December is when we started seeing -- which helped us improve capacity utilization also. As I mentioned in my commentary, we were able -- we've seen Century assets improve. November was better than October and December was better than November. So we did nearly 79%, 80% capacity utilization on Century assets, up from below 50% a quarter ago. So this is actual work happening.
Understood. Sir, secondly, on our volume growth. Now if I -- I think last December, Nathdwara was just for like 18-odd days. So if you look at ex Nathdwara, it's a 7% to 8% volume decline Y-o-Y. Is that the right calculation?
Ex Nathdwara. It is very difficult because we move material crisscross. If suppose I was not moving material from Nathdwara, I would have moved material from Aditya Cement and Kotputli. So beyond a point, it is impossible for us to segregate old versus new.
Okay. But you are still, I mean, confident that we've not lost market share and industry would have -- overall volume growth in the industry would have declined by more than 4%, 5%?
No, I never said anything about volume decline in the industry. Industry would see a decline of 1%, 2% only or nothing significant.
Understood. Okay. Just one small clarification. Is there any progress on the Nathdwara's noncore assets?
Oh, I forgot to update. We have appointed merchant bankers for China and nonbinding bids have been received. We will take action in post -- I was thinking of post, Chinese New Year holidays begin from today and the country shuts down completely for 15 days. But now I'll have to wait for this new virus issue which has come up. I don't want to travel to China. So we will look at the next steps on China in the month of March. And as far as Europe is concerned, things are progressing well. We might be able to close the deal by June. Dubai, unfortunately, we haven't been able to find any suitable buyers. We are trying to operate the plant and improve its efficiency.
The next question is from the line of Navin Sahadeo from Edelweiss Securities.
So a couple of questions. On Nathdwara cement per se, capacity utilizations you mentioned remained at 60% in this quarter. And I think it has remained at that level for a while. Now in Century Textiles...
Correct. Yes, sorry, go on.
Yes. So my question basically was that in case of Century Textiles, I mean those assets, there seemed to be like a good ramp-up progress happening there. December, as you said, was 79%, but Nathdwara remains at 60%, but I think overall region per se in North, they could be at least upwards of 75% or 80% or so. So what's the...
So it's the market mix that determines our plant to market ratios. So we have surplus capacity available in the market and we'll use whichever plant is most L1 in terms of logistics costs to serve the market.
Got it. Understood. So basically, other plants could be operating at a much higher utilization probably and then...
Yes, yes, could be.
Okay. And in case of Century Textiles, you said average for the quarter was 55%, but exit was about 79%.
Yes.
And with March quarter only being better versus the December quarter, we can easily expect an upwards about 85%-odd utilization for the full quarter.
It's distinctly possible. As things stand, the volumes are picking up. Demand is picking up. So it could reach an 85% level also.
Okay. And then my last question on the petcoke usage. The presentation mentions overall petcoke at about 77% versus 69%. I'm assuming that is for the quarter?
Yes, yes.
No, because in your November corporate dossier or that November company presentation, what I see for the first half, petcoke consumption is actually at 64% versus 71% last year. And at the same time, I think we are ramping up petcoke usage, both at Nathdwara as well as at Century. So I just wanted to confirm. So...
No, absolutely, it's bang on. No confusion. Century has come in now, and from an insignificant petcoke to a high petcoke. Nathdwara was 0 pet coke to now 100% pet coke. So this quarter has an advantage in terms of petcoke consumption. And in current times, petcoke has lost its shine because it is easily swappable between U.S. coal. U.S. coal also has a high calorific value, so whichever sells cheaper will be used.
Got it. Got it. And just one last question, if I may slip in. Sir, in the previous quarter's con call, you seem to be a lot interested about Emami Cement. I think there was some question about, will CCI be an issue or even to the extent that since you're already announcing a 3-plus million ton expansion there, would you still be interested in Emami? And now there's a change of heart. You said you're not interested in their assets. So if you could just throw some -- like to understand is there a -- what could be...
We evaluated, we did the due diligence. We put in a lot of effort to understand what value it brings to the table. They don't have clinker, and there's surplus grinding capacity and some land bank. You can't sell me a dream and value it at a EV of an operating plant. So there was a lot of disconnect. There were a lot of other issues that we found at the due diligence which were not comfortable for us.
Got it. Valuation disconnect largely. Got it. So that helps. And just one housekeeping question. These white cement volumes and revenues that you normally give, [ Nilesh ] shares, I think...
3.5 lakh tons in total.
3.46 lakh tons is this quarter as compared to 3.7 lakh tons Q3 '19. And...
Revenues?
Revenues. [Foreign Language] [ Mukesh ], [Foreign Language].
INR 460 crores.
This quarter and last quarter?
INR 500 crores last year.
And RMC revenues?
INR 500 crores for this year and last year INR 527 crores.
Our next question is from the line of Rajesh Ravi from HDFC.
I have a few questions. For the East expansions which you just -- going ahead, what sort of clinker backing do we have? Or are we still have some clinker expansion opportunities in East? And second would be on the WHRS, whichever places, and what capacities we are adding over the next 1, 2 years?
We have clinker available at Hirmi/Rawan and some surplus, which is coming in from Maihar. While Century has -- in totality, you might see from their perspective, they were short in clinker, but when we are merging it with our overall network, we have some surplus clinker available from Maihar and the debottlenecking that we are doing at the Century plants, which will help us meet the requirements at Cuttack, Dankuni and Pataliputra. Dalla -- existing Dalla also is undergoing debottlenecking, which not on any CapEx, it's a routine stuff being done, which is releasing clinker capacity for us.
And Dalla, by when you expect the clinker to be up and run?
Dalla Super, I would keep time in hand and commit by March '21. A lot of progress has been made in the UP government. The files have moved to the central government now, to the ministry -- MoES and hopefully, we'll get clearances in time for March '21 clinker going onstream. Second question you asked on WHRS, Nilesh, just with the locations?
So we will be having in Gujarat plant; Andhra, at Tadipatri plant; in central market, Bela plant; and the Nashik plant.
Manikgarh. Okay. So Manikgarh, the Century plants also will be considered for expansion of WHRS. I think my colleague stopped me because Board has not yet approved it. We are still firming up the proposal.
Okay. So just extending on this question, we have around 85-megawatt WHRS currently?
103 megawatts.
Today.
Today.
Okay. So we added something in this quarter, Q3?
Last quarter. Last quarter.
Yes, yes. Q2 was added, not Q3, Q2 was added.
Okay. Which place, sir?
So basically, it has got partly commissioned at Gujarat, Tadipatri and Rajasthan at Kotputli plant.
Okay. Sir, on 5-odd -- 5, 6 megawatt each.
Yes, 6.
So final target at 131 megawatt is what remains for you?
141.
141. So additional 141, okay.
Up to 141, everything has been sanctioned and work in progress. We will look at the next phase because there are -- this would cover about 11 plants, right?
Yes, 11 plants.
This covers about 11 integrated plants out of 22 integrated plants. So there is scope for doing WHRS in other plants also.
Great. And sir, just 2 last questions. One on the Binani, what helped you scale up INR 1,500 EBITDA margins? We understand pricing is relatively stable, but despite that, this is a really strong number. And first on this maybe, please?
Our brand is very strongly respected in that market. We sell more than, I think, 25 million tons annually or -- I beg your pardon, plus/minus 25 million. So point is Northern markets, we have a very strong foothold and the price premium that we enjoy in the market is very strong. Cost advantages, we have been able to drive very hard in the improvement program for Nathdwara plant. Logistics costs, one of the biggest things. And it has a very sweet location. It's a sweet spot that this plant sits in, bang on the borders of Gujarat and Rajasthan, giving it an optimal advantage on leadership.
Okay. So what would be a sustainable margin, because earlier we were factoring INR 800 to INR 900 will be a sustainable EBITDA margin? But in this Q3 itself, we've seen an...
You were factoring and not we were.
I mean, as an analyst, we were not factoring in obviously, INR 1,000 plus and INR 1,500 in Q3 obviously sets a high benchmark for this plant.
Yes. So I mean I will not let it go below 4-digit mark.
Great. That's a great thing, sir. And lastly, because you are not going ahead with the Emami, at least for now and your own expansions are there...
Not at least for now. Never.
Okay. Okay. So do you see the competition remaining elevated in that market, because you would also have -- that market will remain relatively fragmented? And a lot of capacities are piling up across Orissa, West Bengal grinding units and all. So what is your thought process in terms of rising stability in the Eastern market?
For East, I think there is so much of demand today also. And whenever new capacity stabilizes, there is some correction in prices and then prices bounce back. However, it has not helped the overall EBITDA for the zone to improve. I don't think -- if you were to analyze each as a stand-alone, if you have results of companies for that East zone only, then nobody would be generating a 4-digit number in the Eastern markets. So it's a market for high-capacity utilization, good operating leverage.
The next question is from the line of Bhavin Chheda from Enam Holdings.
Two questions. One, what was the average lead distance in the quarter and 9 months, if you are sharing the approximate numbers?
400 kilometers.
Around 400?
Yes.
This would be after including Century, Binani, everything.
Yes. And Century, Binani and clinker because clinker travels long distances, we transport clinker from South to East also.
Right. And sir, what would have been the white cement wall putty and the RMC EBITDA in this quarter? I missed that number if you shared.
No, difficult to compute it separately here.
Combined number you have for the quarter?
No, don't look at the EBITDA separately, it's cement for us.
Thank you. Ladies and gentlemen, that was the last question. On behalf of UltraTech Cement, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.