Volumes ex-Orient were flattish Y-o-Y for the March quarter but FY27 guidance is 80 MT (9-10% growth) against industry growth of 5%. How do we reconcile? Also, will the timeline to 140-155 MT capacity reset?
For FY '27, the 80 million indication (around 8%) is supported by stabilizing acquired Sanghi/Penna, the ongoing expansions getting commissioned between now and September, and 10 million tonnes of incremental capacity. Primary focus remains organic in terms of stabilizing ongoing expansions and already acquired assets. The target plans of FY '28 could move a year or 2, on a safer side FY '30. But what matters is ramping up volume from existing assets - even hitting 120 million tonnes by end of '27 gives good leverage on market opportunity.
How much of the FY27 improvement is dependent on internal execution versus external normalization? And what's a realistic premium-share target beyond 35-36%?
Vinod: External factors affect everyone; weighting more on internal execution and differentiation. Karan: Whatever guidance we are giving is 100% controllable by us; if we don't achieve it, it's purely internal execution. The whole team is hyper focused and we are very confident on delivering. Vinod: 36% premium share is a good number to sustain as a percentage of trade sales.
Last call (first week of February) commentary was December exit well below INR4,000 and Q4 commentary INR4,500 with one-offs. With better seasonality, premiumization and pricing in Q4, plus typical inventory carry, how does the math work to a INR4,500 average and only INR4,100 March exit?
In December we were upbeat on Penna turnarounds, but Penna is South-skewed and South was the most affected geography for March quarter; took machines on shutdown plus a couple of breakdowns - higher R&M. Higher sales/branding spend. Abnormal packing bag costs in March, higher fuel cost and consumption. December quarter was also INR4,500; March INR4,500. Commentary was always about exit month of March getting closer to INR4,000, not the average. Could not come below INR4,500 for Q4.
How important is Naliya railway line for Sanghi (currently 57% utilization)? And on JP assets, will those come to us given our own organic ramp-up to do, or could we pass?
Sanghi base model is not linked to Naliya railway line - it's marine infra-driven, with 7 vessels ordered for progressive delivery starting next year, plus road movement. Railway is an add-on, not in base model. Ramp-up applies to existing capacity utilization, not capacity expansion. JP - the RP is another listed company, inappropriate to comment from my side; as developments happen, we'll come to know.
Ambuja's EBITDA per tonne is the lowest among first four reporters with high cost inflation. Will industry/company raise prices to pass through? And can you give EBITDA per tonne guidance for FY28 given building blocks of cost/price/turnaround?
Demand is subdued for April-May, so passing on price is hard - if industry attempts X, I'd be happy if it gets half. Cost has gone up at least INR25 a bag; only way is focus on own cost. Internal factor more important than external. Herculean task to estimate EBITDA per tonne now - INR4,500 peaks out, then comes down. Next 2-3 quarters we'll keep you posted. Karan: Cost roughly INR250 reduction this year and another INR250 next year - minimum INR500 cumulatively.
With INR500 cumulative cost improvement over the next 2 years, are we shying away from the earlier INR3,650 target? Also is the 15 MT of debottlenecking still on, and what was FY26 brand/advertising cost?
We are not shying away from the target - INR500 is what we can commit right now for the next 2 years. We have the runway to go to the earlier INR3,650. 15 MT debottlenecking still continues - just timing differs based on max return. Vinod: FY26 brand/advertising was closer to INR70 a tonne on full year basis.
Current clinker capacity? Q4 average cost vs full-year? And given INR400-500 industry cost inflation, should we expect INR200-250 incremental costs to be offset by fly ash/green energy savings?
Clinker capacity as of now is 69 million tonnes; adding 4 million at Maratha this year. Quarter cost is normalized INR4,250 plus INR250 of escalation = INR4,500 a tonne for March quarter. INR4,500 is the peak, with plus/minus INR50 aberration. If nothing increases further globally, you will see a decline of at least INR150 to INR200. Industry pricing only modestly improved INR10 (INR15-20 in select pockets). FY26 capex INR7,500 crores; FY27 estimate INR6,000-6,500 crores.
Realization moved only modestly Q-o-Q vs peers up 1.5-2%. Is this mix? And given 71-72% blended utilization on expanded capacity, do we not need additional capacity in FY28 - is that driving calibrated capex?
Vinod: Price sustained at INR254 per bag, modestly up INR1 from December, journey for higher blended/premium has just begun. Karan: We know where the gaps are - certain capacity is in wrong places. We'll add capacity in markets with high share and recall value to reduce logistics cost and improve penetration. Apart from Rajasthan and Maharashtra, won limestone in Assam (new territory, starting maybe end of this year) and Mundra (new clinker line). Inorganic - we keep evaluating, but focus is squarely organic development and greenfield expansion.
Why is Ambuja's fixed cost (employee + other) up significantly Y-o-Y vs peers? Why planned shutdowns in volume-push Q3 and Q4 rather than monsoon? Target utilization for Sanghi/Orient/Penna in FY27, and is more capex needed to upgrade acquired assets?
Higher branding/advertisement to promote trade and premium; higher R&M (some unplanned breakdowns at Penna). Heat consumption 35-40 kilocalories above target. Ex acquired assets, EBITDA per ton would be INR70-80 higher (closer to INR800+). FY27 utilization targets: Orient at full capacity, Sanghi 65-70%, Penna 55-60%, Ambuja+ACC 75-80%, consol blended 70-75%. Disciplined capex - first commission the existing 10 million in hand, then highlight new program. Mundra is in pipeline.
Reconciling cost: Q3 commentary said INR4,000 January / INR4,100 exit; how is quarter cost INR4,500? Also ACC operating cash flows are sharply negative and consol working capital was negatively impacted - explanation?
ACC has receivable from Ambuja under the MSA - shareholders approved ICD wherein receivables get paid off, so this will get knocked off next quarter. On Ambuja standalone, inventory is higher but receivables are well-controlled with higher trade share. On cost: anticipations didn't work out for acquired assets; packing bag situation came up. Hit INR4,100 for the month of March (normalized) but West Asia war added INR250 escalation. Peak is here, will taper down with passing quarters.
What prompted the reset right now? What are the 5 key monitorables for the next year? And how does SLA fit in after the reset?
Why reset - our performance has not been great; haven't delivered what we promised. 5 focus areas: (1) L1 plants delivering to respective markets discipline, (2) trade vs non-trade discipline, (3) raw material consumption + electricity/energy reduction, (4) channel network, (5) ~80% of effort tied to cost. Until we deliver, no point in more capital investment. SLA is part of these initiatives - enough competent partners in India; helps clean up legacy union issues at ACC; reduces cost and improves efficiency.
Can you break down the INR6,500-7,000 crore annual capex over the next 2 years - growth versus cost efficiency versus other?
Roughly INR4 billion is capex already under execution - includes capacity, WHRS and fly ash transportation. Balance is debottlenecking plus maintenance capex.
When Adani acquired these assets, there was an ambition to become industry leader and double capacity. Current guidance seems subdued - is there a reset in strategic ambition, and what's the target IRR for new capex?
Honestly yes, partially there is a reset. We are not moving away from the target - we are moving away from the timeline. We are not delivering what we committed, so it makes sense to step back, course correct, and reset capacity enhancement plans and time frame. Project IRR has to be 18% - this is all equity money, so equity return like anyone else.
The INR250 reduction guidance for FY27 - is it net off the INR250-300 cost inflation already in place, so net-net flat or up? And core working capital fell 30→20 days but non-core ex-cash jumped from 40 to 49 days - reason?
INR4,500 is the peak; INR250 reduction is from here - so INR4,250 target for FY27. Q1FY27 could be flattish (around INR4,500); then tapers. For the year, INR250 reduction is on full-year average. On non-core working capital - some is incentive booking moving to actual receipt basis to avoid pending long-term accruals; some is accounting working capital - can discuss specifics offline. Core working capital efficiency will continue. New clinker assets: Maratha 4 MT, Mundra 2 MT, Assam 2 MT - 24 to 28 months out.
Is the INR250 cost reduction on full-year FY27 average? And current April prices vs March? Also full-year FY26 RMX EBITDA?
Yes - INR250 is full-year FY27 average. June quarter is flat from March quarter, so acceleration has to be more for the rest 3 quarters. April pricing up around INR10 vs March. Full-year FY26 RMX EBITDA is around INR300 crores.
Capex is continuously getting delayed - Maratha plant, Chhattisgarh - despite Adani's pro-capex reputation. What is the underlying issue, and why repeated breakdowns at bigger plants?
Capex has not been up to the mark - that's why we're pausing and correcting. Reasons: (1) did not choose the right contractor for execution, (2) started projects when we acquired Ambuja/ACC with no team in place - took time to build team, (3) projects started without full engineering being done - using next 6 months to complete engineering for new projects. Confident we'll complete in given timeline now. Breakdowns predominantly in acquired assets (Penna, Sanghi) - higher R&M this year because earlier maintenance was not done.
Current price gap between Ambuja base and premium product, and how does Ambuja's price compare to nearest competitor?
Gap between base and premium product - INR50-55 for super premium, INR20-25 for premium. On competition - pan-India players prices are more or less in similar range in a few districts (INR5-10 here and there, either higher or lower). Reflected in NSP of the quarter, close for number 1 and number 2.
On recalibrating capacities being in 'right location' - where were they initially, and where are you moving them?
Recalibration is happening because logistics cost is high - integrated units are traveling too far. Shutting down grinding units in some locations and moving them closer to market. Sanghi predominantly clinker plus cement - moving toward predominantly clinker in next 3 years; new capacities coming up on coastal Gujarat (Dahej Line 2 is example - Sanghi supplies clinker, cement supplied from coastal grinder). Recalibration is majority in North UP/Bihar region and Southern Gujarat/Maharashtra. Both ACC and Ambuja - e.g. Bihar market served from Chhattisgarh sub-optimally; will set up Bihar grinding units and keep Chhattisgarh as clinker only.