Thank you, Yashashree. Good day, everyone.

On behalf of HDFC Securities, I welcome you all to Birla Corp's—Birla Corporation's Q4 and FY26 earnings call. The Birla Corp management will be represented by Mr.

Sandip Ghose, MD and CEO, and Mr. Aditya Saraogi, Group CFO.

I now hand over the call to the management for their opening remarks, which will be followed by Q&A. Over to you, Sandip sir.

Very good morning or good afternoon to all of you. Thank you for joining in such large numbers on a Monday morning.

We know Mondays are busy days and lots of activities have happened around the country, lots of announcements. We don't want to take too much of your time in today's call.

Most of our statements have been contained in the press release, which you have seen and which I find has been also captured by many of the analysts. We will dive straight into some of the operating parameters and then get into your questions.

This is Sandip Ghose, Managing Director, Birla Corporation. With me, I have Mr.

Aditya Saraogi, our Group CFO. On the operations side, I have Mr.

Rajat Prusty, who is our CMOP, Chief of Manufacturing and Projects, and Mr. Kalidas Pramanik, who is our CMO, Chief Marketing Officer.

He is present here. In short, as you would have seen, we had during the year a few challenges and marginal setbacks, especially in regard to the operations of a couple of our plants.

We were, I think, able to overcome them. Also sticking to our strategy, we were able to make the most of the tailwinds which one observed during the last quarter, and make the most advantage of it in the marketplace as well as in our operations side, and been able to deliver healthy set of numbers, we believe, or which we find satisfactory for ending the year on a reasonably good note.

As we look forward, I know we are all staring at many uncertainties and variables, any kind of projection has to be tempered with caution for the unknowns which would be applicable to all, not just all companies in the industry, but the country as a whole and maybe the entire global economy, especially some of our neighboring countries. We are sort of taking it as it comes.

As it is, we don't make much of forward-looking statements, but even going forward, I think we will be cautious in our guidance for the months ahead. We are in a very, very dynamic and volatile situation, as you would know from the day we've declared our results on Saturday, till today, we've had announcements from the Prime Minister, no less than the Prime Minister himself in terms of some of the clouds looming on the horizon.

We have to look at each state separately and go forward. I think two things are there.

We are, as far as we're concerned, we are on a solid footing in whatever we have done and what we have demonstrated hopefully to the market and to all of you who observe the company, follow the company closely, that we are not the ones who do knee-jerk reactions or veer from strategy. We set our course in a particular way 3 years or more than 3 years ago, post-COVID, and we have, by and large, been able to stick to that, adhere to that, and without getting distracted by temporary ups and downs or some regional imbalances and disturbances.

With that, I hand over to Mr. Aditya Saraogi to give you a broad overview of the numbers.

He is fresh from the CNBC interview wherein also he has given I think an overview, which many of you have heard, and I found some of you have also reported on that. We will get straight into it and conclude the meeting as soon as we can.

We would also request you to be focused on your questions and what is relevant because we may not be able to unnecessarily speculate much in the future. Those futuristic questions, which sometimes comes up in a natural course, ask only what you think is immediately relevant in the interest of time.

Thank you very much.

Good afternoon, ladies and gentlemen. In respect of our performance for this financial year, we have done a growth of about 4% in volume.

Our EBITDA for the year was close to about ₹800, and for the quarter ended March was close to ₹1,000. Apart from the quantitative factors, there are certain qualitative factors where we have taken conscious efforts and we are seeing positive results.

For instance, in respect of blended cement, we have moved from 82% in the last financial year to 88% in the current financial year. In the trade segment, from 70% in the last financial year, we have moved to 77% in this financial year.

Our lead distance has come down from 350 km to 337 km in this financial year. Our Mukutban volume has improved from 24.6 lakh tons to 27.7 lakh tons in this financial year.

With that, I open the forum for Q&A and will be glad to answer specific questions that you have.

Good afternoon to the team. I have two questions.

My first question to Mr. Ghose is looking ahead, how do you see Birla Corporation shaping its growth in the cement and building materials over the next upcoming quarters, and particularly in terms of capacity expansion, sustainability initiatives, and brand placement in the premium space?

That's my first question. I'll ask my second question after this.

Thank you.

It would be helpful if you would have asked your second question as well, but I'll answer your first question. As you know that we do not have any major capacity expansion plans, unlike many others who have announced in the past, but I do notice that some people who had announced capacity expansions are on a rollback or have announced some rollback or slowdown in their capacity.

We have not done any aggressive capacity expansion announcements in the past. We will proceed according to that.

There are no major changes from whatever is already there. We know our Maihar Line 2 is work in progress, along with that will come the blending units which are linked to that, which are Eastern UP around Prayagraj some of those.

Beyond that, we are not really looking at huge acquisitions, expansions, and with the Maihar Line 2 coming by financial year '29, we would go up to 27.5 million tons is what we are looking at. What you would see in terms of our strategy so far, you see our total numbers this year, we have reported the highest ever number with our existing capacity.

What is happening is our strategy of moving progressively towards almost 100% capacity of blended cement. We are making steady progress despite the change in the market composition, because in our markets, core markets where we are, the way markets are expanding and with the investment in brands that we have done over a period of time, we are finding there's greater acceptance of our blended and value-added cement.

You'll find therefore the composition of our premium volume in our total kitty is systematically increasing, and not just across units, but across regions also. How our Mukutban volumes are progressing, there again in our core markets, we are able to acquire greater market share, and that too through our blended.

These kind of efforts will continue. We have installed our third line in Kundanganj.

That will give us again some play in our core and profitable UP market. All of that will again come from blended cement, unlike some people who have set up new units, grinding units in Uttar Pradesh, we are aware of, but they are grinding OPC over there.

That's not our idea. We want to do it a value-added blended cement, and that too our premium brands.

That is basically how things will move. We are not talking of any big-bang expansions just now.

There are some, as some mines acquisitions, etc., are happening, but those are much more futuristic, and we'll talk about that in the days to come, or years to come. Thank you.

Thank you. My second question to Mr.

Aditya is from a forward-looking point of view, want to understand your plan of action on how you see capital allocation evolving to balance growth investments, reduction in debt, and shareholder returns, and what structural cost levers are being built today to ensure margin stays strong in the coming quarters? Thank you.

See, in terms of capital allocation, we've got about ₹4,000-₹4,500 crore capex plan underway, as is just answered. Where we are taking our capacity, 1.5 million last financial year where we went from 20 to 21.5.

Now, in the next 2 years, we're going to take it up to 27.5. Most of our internal accruals is going to be allocated towards that capex program.

You will not see any debt reduction In fact, the debt is going to go up in absolute terms, though in terms of debt to EBITDA, it will not exceed 2.5 is what our outlook is. As far as cost reduction is concerned, one major lever is that we have just started production on mining in our Bikram coal block.

The full-fledged production is going to come from next financial year. That is going to be one major lever in so far as cost reduction is concerned.

Thank you, and best wishes.

Thank you.

Hi, sir. Thank you and congratulations on better operating performance this quarter.

Sir, before asking questions, just to clarify or maybe reconfirm whatever the Saraogi sir has said on the CNBC kind of a 20 million volume in FY27, which is a close to kind of a 7% growth, ₹800 EBITDA per ton, ₹900 crore capex for FY27, and some ₹50-odd price hike which is there in April, and ₹150 to ₹175 cost per ton increase from Q1 onwards. Just wanted to reconfirm that this is what we are looking at?

Just one small correction. I said close to 21 we are close to 22 million tons.

I did not give a specific number. I said mid to early double digit in terms of volume growth.

Okay. In that scenario, sir, first on the volume front, if I exclude the Mukutban, the entire other capacity, even for entire full year of FY26 is, one can say close to kind of a 99% utilization is there.

Whatever the growth in the volume in FY27 likely to come is primarily on the 1.4 million ton Kundanganj that we have started. There is some headroom

in Mukutban also. There is some headroom in Mukutban also.

Okay. Got it.

Now on the couple of data points, sir, particularly on the kcal front for Q4, what was the kcal, and in terms of fuel mix also? You have said the Bikram coal, the full-fledged production will come in the FY28.

This year how one can look at and how much kind of a saving this year, and maybe the next year once it will reach the full-fledged, what's the cost difference? How one can look at that part?

Coming to Bikram, this year the annual capacity is about 3.6 lakh tons. In this year, we expect to do about 1.2 lakh tons, or thereabout.

Next year, we expect to achieve full capacity. To give you a sense on the cost, our landed cost for Bikram is going to be in the region of 1 to ₹1.05, and the current prices of domestic coal is anywhere around ₹1.45.

That will give you a sense of the cost arbitrage that we will get from Bikram coal block. What was your other question?

What was the kcal cost for

kcal? Kcal cost in Q4, it was 1.53.

Okay, 1.53. Mostly the in Q1, the primarily the packing bag cost, which would be ₹18-₹20, and here also

Packing bag and fuel. Packing bag and fuel.

Fuel, okay, okay. Largely

the diesel cost will go towards increasing the logistics cost a bit. Largely the diesel cost will go towards increasing the logistics cost a bit.

Okay. Got it.

Just a clarity in terms of the capacity. So, 1.4 million ton each for Prayagraj and Gaya Phase 1, this we will be starting by FY28 end, or it would be maybe Q3, Q4 FY28?

Rajat

Sir, Q3, Q4.

Q3, Q4. Sir, Q3, Q4.

Q3, Q4. Q3, Q4 that we will be starting.

In terms of the, sir, you said that now we are looking at a 100% kind of a blended cement, which will be and the premium share which will be keep on increasing. This current 63% premium share, how one can look at to inch up, and the blended cement also 87% when one can look at kind of a 100% kind of a number, and how this will help us in terms of the extra EBITDA?

See, it's difficult to predict exactly how. What you would see in our trajectory, quarter-to-quarter, year-on-year, if you see, we have been moving in that direction.

This is despite the market composition changing. There is, as in most markets, we have seen the growth in non-trade segment increasing, and consequently there is an OPC segment which has gone up.

We have not been lured by that. We have stuck to our position of pushing our blended cement and the premium cement up, and that is a strategy which we will follow consistently.

We are not veering from that, and that's the point to be noted from your thing, that you will find that we are doing that in a very consistent manner. It's difficult to say when we will reach 100, or whether what is the level we are today, whether that level will remain or there may be a slight slippage or reversal on a quarter-to-quarter basis or something.

It can be. Those are subject to market variations.

We are extremely clear on that strategy. What is further thing we're going to do on the brands, etc., that only we can't talk about now.

We were the ones who among the I don't like to use the term, the B-category players, we were the first to move heavily towards premiumization. We have gone in there aggressively over the years.

We created a new flagship brand, Perfect Plus, which has now got a practically footprint in all of Northern India to Central India. It is gaining traction and all of it.

That strategy has worked. We hope to lead innovations in that category because others have also moved in that direction subsequently, whoever is the B-segment.

We have seen some amount of dilution in the equity of the A-category players, without naming them, in terms of their price positioning, which has put us at par with many of them, or even higher than many of them in our core markets. That's the direction we are moving.

We have the advantage of being a smaller player with high capacity utilization, we are not really under pressure to ramp up. As I said, some people who have added capacity are having to even grind OPC, which is a very unusual thing, in the grinding units, rather than taking the OPC from their mother unit plants, which are fairly close by.

We are not doing any of that, even if there are incentives available somewhere. We will stick to that, but you can't really predict exactly when we will reach 100%, or whether that 100% will remain constant or there may be slight reversal on a quarter-to-quarter basis.

Yeah. Sir, lastly, the incentive in revenue in Q4 is just a ₹1-odd crore, and if that is the case, how one can look at FY27 incentive on a full-year basis?

See, incentive in Q4, we we have booked ₹140 crore, out of which about ₹90 crore was relating to earlier years and ₹50 crore was relating to the current year. Okay?

There's a in the current year, we have average quarterly run rate should have been about ₹24 crore. You can say to the extent of ₹24-odd crore, the incentive that we booked in this quarter was relating to the earlier quarters.

In so far as the next year is concerned, with Kundanganj coming on stream, we expect the incentives to go up to 130 around ₹130 crore.

Got it, sir. Thank you and all the best.

Hi. I wanted to understand why the working capital got very tight, it hurt the cash flows from operation.

Any particular reason why?

Yes, we consciously started building up stocks because of the geopolitical situation. We were anticipating some tightness in so far as particularly coal is concerned, for coal and the fuel is concerned.

Instead of the normal strategy of driving down the inventories, we consciously built up inventories. That's the reason.

Understood. What is the current debt at the end of the year because of the investment, I couldn't get the net debt number?

About ₹2,100 crore.

₹2,100 crore was the net debt number. Great.

What do we expect the peak debt, just a range in this capex cycle?

In this capex cycle, our expectation is that the peak net debt should be in the range of ₹4,000 crore.

Peak net debt in the range of ₹4,000 crore, understood. What are the interest costs assuming the current rates for that you're expecting for FY27?

It's difficult to give a estimate on that because most of our term loans are linked to external benchmark.

It's EBLR,

okay. That is slightly difficult.

Just one final question for Sandeep sir, that we keep seeing

on that business?

Hello? Hi.

Can you hear me now?

Yeah. Just for the jute business, have we considered getting in a strategic investor or turnaround because it's been taking quite a bit of time?

No, we don't have a problem in investing. Jute business turnaround last year, it was a very exceptional year when jute prices have reached abnormal highs, historical highs it has reached last year.

What kind of levels which nobody has seen. It is due to multiplicity of factors, including the stoppage of imports from Bangladesh and variety of factors.

We feel and that has thrown many people out of gear. There are many jute plants which have actually shut down, jute mills which have shut down or people have reduced their man-days, the weekly workings to 4 days or 3 days in a week.

All that has happened. This has been a very abnormal thing.

Jute, we don't need a strategic investor. We know the business.

We have been in the business the longest among any of the current players, the management. Ours, as is the oldest Indian jute mill.

We know what is to be done, but it's a matter of time and opportunity. We expect now, with the change of government in West Bengal, jute will receive a different kind of attention, and there will be greater coordination between the Center and the state government.

Because so far, jute, as is a central textile ministry subject. There has been a lot of interest, especially the current textile minister, Giriraj Singh.

The Center and the state have not always worked in sync. Whereas to give an example, textile is a PLI industry and there has been a lot of PLI activity has happened in textile for other materials, in jute nothing has happened.

I have personally met earlier the textile minister, Mr. Singh, who has visited.

They have been urging the industry to look at innovations, industry to look at new products rather than rely only on government orders, etc. None of that was really happening.

There are a lot of structural, systemic issues. Hopefully, there is greater attention over there, we have a new head of the NITI Aayog, who apart from being an economist, he was last time elected from the jute belt.

He has gone. I am personally optimistic in a lot of positive policy changes, which will show improvement in the jute industry per se, something which has not happened for many, many years.

Understood. Thank you.

Namaskar, sir. Hope I'm audible.

Yes, yes. Even without the phone, because you're just 1 km away from us.

Even if you don't speak into the phone, we'll be able to hear you, Saket.

Okay. Thank you, sir, for your comments.

Sir, firstly, our foray into the RMC and the construction chemical business, Sandeep sir, you can outline to us what are we eyeing and exactly in this space, where we intend to make our mark?

On RMC, our strategy of RMC is very different from others. In the sense, there are many other people who are investing in RMC, including the largest players, they look at RMC as a channel for their own cement, because their own capacity utilization of cement is much lower.

While they're also trying to certainly move up the value chain, but one of their main drivers is they can use their own cement. Whereas for us, the RMC is, a matter of certainly climbing up the value chain, but it's more importantly a question of brand extension.

It's a question of leveraging. We as a company, I have said this in the past, when we look at assets, we don't look at assets as just manufacturing assets.

We look at our marketing assets, though you don't assign a value to them on the balance sheet. We are very conscious of our marketing and sales and distribution assets.

We think that just like one sweats the manufacturing assets, there is a scope to sweat the marketing and go-to-market assets. That is what we intend doing with RMC.

Our RMC progression so far has been slow, but steady. Very soon we'll have our fifth plant in Uttar Pradesh.

That's because Uttar Pradesh is a core market for us where we have a strong brand equity for Perfect Plus. Our RMC is being marketed under the Perfect Plus brand name.

We are doing so, but we don't want to really go overboard on RMC. We know how many companies have burned their fingers.

There are a lot of issues in the RMC segment, particularly relating to outstandings, your recovery, and those commercial aspects. We don't want to do something overaggressive, which is going to hurt our main business.

Far, first of all, I think we are developing a reasonably good footprint in UP market, which is giving us a lot of learnings. You will probably get to see our progressing now extending the same format to other regions where we have a strong brand equity.

On chemicals, there were two parts to it. When we launched it, there was a part of wall putty and there was of construction chemicals.

Wall putty is a market which we have seen is highly price driven and a lot of new entrants have come in not only from the cement side, but also from the paint side. It is a very, very commoditized market.

We don't see too much of value, we're not going aggressive on wall putty at the moment. We have seen a lot of traction in the chemicals side.

There again, we are having a brand synergy with our premium brand, Perfect Plus. We are changing our supply chain model there over learning, and you will see us trying to scale it up in the coming year.

Because of in between COVID, everything else, it was put on the back burner for a while and we were focusing on other areas, but you'll find now much more focused attention on chemicals. Chemicals was never going to be a huge number.

It is going to give you again a brand extension thing, and which will probably give us a sort of a multiplier effect on our existing brands. We're not really looking at it in a huge number, but it is going to certainly we believe add value to our overall brand assets and positioning.

Sir, in terms of capex, any significant number we will be eyeing in this segment?

These are all capex-light projects.

Okay. Sir, are

you going to join back the queue, please, as we have participants waiting? Second question only was, ma'am.

Thank you, ma'am. Saraogi sir, as you have alluded in the interview also about the power and fuel cost.

With the rising crude and the pet coke prices, how are they going to effect our fuel prices? What steps are we taking to improve our mix in terms of further investment in the WHRS?

Also please provide us the current maturity number of debt for the current year. What numbers we are going to close for FY26, 27?

Thank you, sir.

See, in terms of the total cost impact, I have given an estimate of ₹150 to ₹175 per ton. That is mainly on two counts: one is the packaging cost and the other is the fuel cost, okay?

Within the fuel, our current mix of imported fuel is around 30%. Let me share with you, it's not only the imported fuel cost which is going up, even the domestic fuel although the cost is relatively less, but even the cost of domestic fuel is going up because many cement players are now switching from imported fuel to domestic fuel because and also during the strong summer season, there's a strong demand for domestic fuel.

Even the cost of domestic fuel is going up. In so far as waste heat recovery is concerned, we are trying to optimize the capacity of existing waste heat recovery wherever possible.

Definitely, our new plant will have optimized level of waste heat recovery in the Maihar Line 2.

Didn't get

the last point, sir. by 2

Didn't get your last point. Yeah.

No, there are two things, Rajat here. Yes, waste heat recovery, as said by Aditya Saraogi, yes, we are working on that to improve our efficiency in the waste heat recovery, including the new setup which is going to come for the Maihar Line 2, that will be there.

Apart from that, the solar and hybrid also, we are continuously working on that. As of now, you can see that there is another plan of around 25 to 30 MW, which is going to improve in next 1 to 2 years of time.

Hello, sir. Thank you for the opportunity, sir.

Good set of numbers. I just have a couple of questions.

Firstly, with respect to our operating cash flows. We have generated more EBITDA than last year.

However, our operating cash flow has kind of declined very sharply versus the previous year. Could you help me understand this bridge, sir, versus the previous year, why there's such a sharp decline?

There are

some of the incentives that we've accrued, particularly from Maharashtra, that we have not realized. Hopefully, by next year, we'll start realizing that incentive.

That is one. Secondly, as explained, the working capital has gone up because of the conscious effort to increase the fuel inventory.

That is the second reason for lower cash flow.

Sir, what would the receivable amounts be, sir, pertaining to this incentives for us?

Total receivable is about ₹500 crore.

Got it, sir. We expect this to be coming in the current year, is it?

This will start seeing realization from the current financial year.

Got it, sir. Just one last question, sir.

What's the capex guidance for '27 and '28, and how much capacity commissioning for the next 2 years?

We have not given guidance for the next financial year, but for FY27, it is ₹900 crore. Our capacity addition by FY29 will be 6 million tons, from 21.5 to 27.5.

Got it, sir. Any timeline when the next set of capacity is coming in?

All in FY29. Some early at the beginning of the year and some towards the end of the year.

Okay.

Thank you so much, sir.

Hi. Thanks for the opportunity and many congratulations for good set of number.

Appreciate the consistency level of the company, and the fourth quarter is a kind of surprise to the street, I can say. I have a couple of questions.

Just wanted to check Brahmapuri and Marki Barka coal block, when we can expect this has to be operated or something like that, if you can throw some light. This is my first question.

As far as Brahmapuri is concerned, we are not pursuing that block actively because the capacity which was given in the bid document, the actual capacity is much lower than that. We are contesting that capacity of block.

In so far as Marki Barka is concerned, we are in touch with the government for certain regulatory issues. Maybe by FY29 is what we expect to start that block then.

Okay. Do you think this Bikram coal that we have started operating in April, this is going to reduce our lead distance in terms of coal transportation, overall company lead distance, is it going to reduce our coal distance?

Because I can see Bikram coal mining is around 50% distance reducing from your central regions plants. Is this going to help us to Mukutban and central regions if we from this Bikram coal mining?

See, the lead distance may not matter, but what matters is the landed cost that we pay for the fuel compared to the alternates. If you have to buy from the market or from Coal India subsidiary.

There as I explained, there's a good delta in our cost. Landed cost will be in the region of 1 to ₹1.05 per million calories.

I think the current market price of ₹1.45 rupees per million

calories. The last question, if I may.

I could not hear it properly. What is the incentive we have included in FY26 revenue full-year basis, and what is the amount we are going to add in FY27, the incentive?

We have accrued ₹140 crore, out of which ₹90 crore pertain to earlier years and ₹50 crore are pertain to the current financial year.

For FY27, what is we are expecting? Incentive.

₹130, ₹130

crore. Fair enough.

Thank you, sir. Thank you very much, and all the best.

Hello. Am I audible?

Is it better now?

Okay. Thanks, sir, for the opportunity.

Just one clarification in terms of incentives. Broadly for the full year, we've booked around ₹50 crore incentive.

How much is that for Q4, that number?

No, no. For the full year, it is around ₹95 crore, excluding the ₹90-odd crore that was pertaining to earlier year.

For this current year, it is about ₹95 crore, out of which about ₹48 crore have been booked in this current quarter. Okay.

Sir,

what is the number for this quarter, Q4?

Q4, we have booked ₹48 crore. Maybe on the one-time scale, probably ₹24 crore could have been booked in earlier quarters, but because that clarification was received in the current quarter, that's why we have booked ₹48 crore.

Annual run rate of Maharashtra incentive is expected to be about 90- ₹95 crore.

Okay. Thank you.

Hello. Is my voice audible?

Good afternoon, and thanks for opportunity. Congratulations team for excellent set of numbers.

Saraogi sir, just to confirm, the lead distance now is 337 km and the kcal is 1.53. Are these numbers, what I understand, is correct?

Yes. For March.

For March. Okay.

My first question is out of the total energy cost for the current fiscal, how much

My question is how much of our energy consumption is coming from renewable sources in terms of percentage, and how much is the non-RE part? 27% renewable energy.

How the how much do we That is for

power. That is for power.

Power consumption.

Power consumption, renewable energy. Okay.

Okay.

What is our expectation? How much will it go to in the FY27, '28 period?

38%, right?

37% to 38%.

37%, 38% is what we are trying to get into.

Okay. What is our kcal?

Kcal per ton of clinker, you're asking, or paisa per kcal? Per ton of clinker.

Per ton of clinker. It

varies from plant to plant.

Plant to plant.

Towards 700 710. Okay.

That's all from my side. Thank you.

Good afternoon, sir. Sir, what would be the total capex for this addition from 21.5 to 27.5?

₹4,760 crore, including GST. Net of GST, it is about ₹4,300 crore.

Okay. I just missed the opening, but there is some guidance of close to around ₹1,600 crore EBITDA for financial year '27?

Sorry?

There is a guidance of ₹1,600 crore EBITDA for financial year '27?

No, we have not given any specific guidance. We expect our EBITDA to be in a similar range to the previous financial year.

No, because I just wanted to clarify, I heard somewhere that 2 million ton into ₹800 EBITDA per ton.

That you can do your own calculation, right? We have not given any

such Thanks a lot, sir. Thank you.

Thank you very much.

Thank you very much. We appreciate your support, we appreciate your interest in the company.

Pleasure talking to you, and hopefully, we won't disappoint you going forward. Despite the recent uncertainties hovering in the horizon, we will stick to our strategy and do better than our best.

Thank you very much.