Dalmia Bharat Limited (DALBHARAT) FY22 Earnings Concall Transcript

Dalmia Bharat Limited (NSE: DALBHARAT) Q4 FY22 Earnings Concall dated May. 10, 2022

Corporate Participants:

Aditi Mittal — Head Investor Relations

Puneet Dalmia — Managing Director

Mahendra Singhi — Managing Director and Chief Executive Officer

Dharmender Tuteja — Chief Financial Officer

Rajiv Bansal — President and Chief Transformation Officer

Analysts:

Sumangal Nevatia — Kotak Securities — Analyst

Mayur — HDFC Life Insurance — Analyst

Indrajit — CLSA — Analyst

Girish Shadri — Spark Capel Advisors — Analyst

Pulkit Patni — Goldman Sachs — Analyst

Ritesh Shah — Investec — Analyst

Amit Murarka — Axis Capital Limited — Analyst

Shravan Shrah — Dolat Capital — Analyst

Navin Sahadeo — Edelweiss Financial Service — Analyst

Rati Kumar — Jefferies, India — Analyst

Presentation:

Operator

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]

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 uncertain and other factors that could cause actual results, opportunities, and growth potential to differ materially from those suggested by such statements.

On the call, we have with us Mr. Puneet Dalmia, MD, Dalmia Bharat Limited; Mr. Mahendra Singhi, Managing Director and CEO, Dalmia Cement Bharat Limited; Mr. Dharmender Tuteja, CFO, Dalmia Bharat Limited; Mr. Rajiv Bansal, 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 Investor Relations. Thank you, and over to you, ma’am.

Aditi Mittal — Head Investor Relations

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 tab. I will not take much time and hand over the call to Mr. Dalmia for his opening remarks. Over to you.

Puneet Dalmia — Managing Director

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, Singhi 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 tonnes by 2021, set up the strategy and transformation office under Rajiv Bansal to help us realize our vision, address the concerns of investors or non-core assets. We improved our governance through appointment of Vijay 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 have 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 perform 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 and 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 consumer. We had to absorb a large part of it during the year, and that impacted our EBITDA and result and cash flows.

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 [Indecipherable] 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, given the government pushed towards infrastructure building and low-cost housing. We see robust rural demand, which would 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 expansions. 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 adopting heritage project, and was identified as the Monument Metro of nation’s iconic 17th Century heritage site, the Red Fort. 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 450,000, 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.

Mahendra Singhi — Managing Director and Chief Executive Officer

Thanks, [Indecipherable]. Thanks for highlighting about the enrollment of the [Indecipherable] Good morning, everyone. Last year has indeed been a dynamic one for the industry with fluctuating volumes and an unprecedented interest in input cost. Well, 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 week 3, 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 the Q3 as we have delivered a volume growth of 16%, while our EBITDA grew by 67% to INR66 crores. Furthermore, we were able to improve the EBITDA per tonne by almost 43% from INR700 per tonne to INR1,036 per tonne in Q4. On a full year basis, between fiscal year 22, we delivered a volume and revenue growth of 7.3% Y-o-Y at 22.2 million tonnes and 12% at INR11,286 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 [Indecipherable] prices almost doubled from USD128 to USD246 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 INR1,091 a term Brent, 2 years back, we had set efforts on a strategic journey to reduce our dependencies on self supplies and also add to consistency and senility of our performance. In line with the same, we started to announce the usage of green fuel and wind power. [Indecipherable]. — 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 it sense 54%.

At the time, when we witnessed a steep inflect pricing, our team’s foresightedness [Indecipherable]has led results in terms of mitigating the adverse impact. Recently, we have also won the Vinda and Susie coal block in Eastern India, which in years to come will not only add to the above objective, but we’ll also bring out cost efficiencies. For our company, the overall field can be some rates almost doubled from $78 in FY ’21 to $141 in FY ’22. In fact, the side was quite significant even in the last quarter, where our fuel condition cost increased from $68 per tonne 181 within Q3 and Q4. The influence headwinds are expected to sustain for some low time and it is estimated that the fuel presents may further increase…Right?

I’m happy to share that despite the digital price escalation, our trade cost increase was again reasonably contained to 5.9%. And on the back of many expediting initiatives, including digitization, we have managed to retain our leadership position in the freight cost at INR1,060 per tonne, and we also continue to have one of the lowest lead business company in the industry. Now if I talk about whole year, on a full year basis, the adverse effect of just the input cost going up in our P&L account has been more than INR850 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 best is low, which also offers us higher headroom with incremental savings from these investments. On the patient side, we are continuing to take long-term synergy projects and during the year to the shift in the product mix and improvement in operating KPIs, we actually have delivered a see improvement of close to INR64 per tonne. But considering the steep interest in the input stage, it just wouldn’t show up in the output number. — and before I move ahead, I’m happy to share that with all the price efforts of the management and the team, we have one of the lowest total cost per tonne at INR3,989 per tonne for full year FY ’22.

In terms of pricing, even though industry price growth of 3% is ahead of the historical average, Y-o-Y price, the price is tend to grow at the same pace as the input cost. Things are now looking up with 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 INR30 to INR50 increase between December 21 exists to March continue across all our regions, and the trend is continuing.

Moving on the regional performance, if we look at 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 among top 3 companies by volume share. In that 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 for this remains intact, and we have continued to work on strategic projects, including capital investment in the region.

During the beginning of the year, we had undertaken some controlled experiments in terms of product mix and setting, which initially has led to some distressed of market share of our — but with the new products starting gradually, we were able to regain our position before end of the year. We remain committed and upbeat about the growth in the eastern region. On our part, we will just be focusing on the improving our share of trade 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 vesting region through commercialization of the model plant of 2.9 million tonne capacity and closed the year with an overall 35.9 million tonne of installed capacity. By March 23, we are targeting a total installed capacity of 40 million tonnes and [Indecipherable]capacity of 23.4 million tonnes. And further, we remain on track to reach 8.5 million tonnes by March 24.

I also want to mention that while internally, we are working on retaining out the growth trajectory beyond 48.5 million tonnes. But 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 pause to announcement of any imperical 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 reason of 110 to 130 million tonnes by 2021.

As we march forward, DSP will form a contest, all of our die-making and during that year, of CO2 emissions in semi has further reduced to 489 kg and our acidity rate of 8.5x is one of the highest in the industry, and we are find getting proud of this. In order to further accelerate our journey to be carbon negative by 2040. Under the green [Indecipherable]partnership of India and Denmark government, the company has signed MOU with [Indecipherable], a cement and technology company to collaborate and develop bastions to support facility in cement industry. For rest of medical and FC upgrade, I would now like to hand over the call with our CFO, Dharmender Tuteja, and I’ll be happy to answer all your questions following with these remarks. Thanks, Ken, and good day.

Dharmender Tuteja — Chief Financial Officer

Thank you, Singhi. Good morning, everyone. As all the major updates have already been covered by Singhi, I’ll quickly move to the key financial updates. Regarding incentives this quarter, we have accrued INR52 crores of incentives, which takes the financial 2 numbers to about INR231 crores. The collection during the quarter has been INR77 crores, and the total collection for FY 22 has been about INR37 crores.

Incentive receivables as on 31st March stood at INR65 crores. Going forward, including Worli, we expect incentive accruals will be about INR240 crores for FY ’23 and FY 24 each. That being said, during the quarter, we also received the revised letter for the moly incentive entitlement where the time limit for development of the incentives now stands to revised from 2022 to 2026. On the debt side, on a full year basis, our gross debt has reduced by INR602 crores, and the closing debt as of March 31 stands at INR3,140 crores. The net debt to EBITDA as of 31st March was negative 0.6x. With respect to CapEx, we have spent close to INR1,900 crores during FY 22 and our budgeted CapEx spend for FY ’23 is in the range of INR3,000 crores to INR25 crores. In line with our sanction framework and our vision to build a pure-play cement company, the company has successfully completed restructuring of its refectory business. Regarding legacy holdings of the shares of Balimara Solar, we have, during the quarter, taken an accounting call where under India 109, the investment, which needed to be fair value has been revalued accordingly and the corresponding gain and loss having adjusted to the other comprehensive income.

A detailed note to this effect has been given on the financial results. Also in line with the capital allocation chamber, the Board has proposed a final dividend of INR5 per share, which is subject to the approval of the shareholders in the ensuing AGM. This is in addition to the income dividend of INR4 per share, which was paid in October 2021.

The total payout of dividend for the year drops out to INR169 crores compared to INR25 crores paid for financial year ’21. The Board has also decided to induct Mr. Walker Centene Company, a member from Grand Porton Group as Sator in the operating subsidiary companies also, except in Celcom, where Deloitte will continue to be the auditors and Mr. Sakai Shah will continue to be joint statutes and Dalmia Sumanta Limited.

The appointment of Walker Chango and 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 accesses. With this, I now open the floor for question and answer. Thank you.

Questions and Answers:

Operator

We now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Sumangal Nevatia from Kotak Securities.

Sumangal Nevatia — Kotak Securities — Analyst

Yes. Sorry, can you hear me? Okay. 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, given diesel price was relatively flat, what led to almost INR80 increase on a quarter basis for the freight cost?

Dharmender Tuteja — Chief Financial Officer

Sorry, either on mute. Yes. Yes, Sumangal. So one, I would say that still the pet coke prices are at the level of 250 or so and the imported coal is also very high. So it looks that the cost may go up to some extent in this quarter also and maybe another quarter also if you like to predict at the moment, but of course, our gene to announce in fuel would continue and let make to some extent, mitigate the cost increase.

And on the cost of trade, lots of cost, yes, we had — because of the high quantity, we had booked some quantity by rail and some more steps were there on account of which the red cost has gone up, but we are confident that we’ll be able to maintain the yearly cost at cost.

Sumangal Nevatia — Kotak Securities — Analyst

Okay. Okay. So just on the whole cost, I mean, we can see it’s quite strong. But April has already gone and we generally maintain 30, 40 days of inventory. So is it possible to share some more quantification on the cost inflation that we are seeing at least for 1Q?

Dharmender Tuteja — Chief Financial Officer

I would say that prices of coal in our case would be around USD220 to USD230.

Sumangal Nevatia — Kotak Securities — Analyst

Okay. Second question on the CapEx and the expansion. I missed what are you budgeting for FY ’20 as far as CapEx is factored. And overall, we had announced almost a INR10,000-odd crores CapEx last year. And there has been — there should be some past inflation on the overall spend as well. So for us to complete this 48 million tons of capacity now, what estimates are we running?

Dharmender Tuteja — Chief Financial Officer

For the year FY ’23, we are expecting that we should be able to spend INR5,000 crores to INR2,500 crores, which will include some ROI CapEx also, but mainly on the growth plan. And you are quite confident that CapEx in FY ’23 and FY ’24 would take us to 48.5 million tonnes by March ’24.

Sumangal Nevatia — Kotak Securities — Analyst

Okay. I’ll join that with you. Thank you and all the best.

Operator

The next question is from the line of Mayur from HDFC Life Insurance.

Mayur — HDFC Life Insurance — Analyst

Can you hear me? One of the questions already answered, which I wanted to ask. Just another one is for the WHRS and solar capacity, which you’re adding in FY ’23. It’s a bit aggressive one which we see in your presentation. How do you kind of cost savings that you are estimating in coming years because of this aggressive addition of power?

Dharmender Tuteja — Chief Financial Officer

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 changing from, say, INR6 to INR7. So accordingly, we make the impact.

Mayur — HDFC Life Insurance — Analyst

Okay. And any additions after that, basically, if we 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?

Dharmender Tuteja — Chief Financial Officer

So like in FY ’23, we will be earning about 41 megawatts of channel. And on solar part, it will be about 66 megawatts.

Mayur — HDFC Life Insurance — Analyst

Yes, sir, that’s in your presentation. I’m asking about I mean you must be having some long-term plans for this, right?

Dharmender Tuteja — Chief Financial Officer

So yes, from reentrance point of view, I think we’ll be completing all of our projects, all of our skills will be treated with the A10, where we have the requirement of waste heat. And on solar, yes, gradually, we will ramp up.

Mayur — HDFC Life Insurance — Analyst

Thank you very much. I will come back.

Dharmender Tuteja — Chief Financial Officer

Yes. To be specific, the FY ’23 savings are close to about INR150 crores, which you expect from this power and also in FY ’24, close crores.

Operator

Next question is from the line of Indrajit from CLSA.

Indrajit — CLSA — Analyst

Two questions. First, we have seen large inflation across all construction materials with 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 rural regions?

Dharmender Tuteja — Chief Financial Officer

I wouldn’t say that, yes, there is a little interest and more particularly, people are quite an save about the prices of steel to some extent maybe in tier 2 and 3 cities, it may be adding impact. And another impact may also come because of interest cost may go up for housing loans. But what that…

Indrajit — CLSA — Analyst

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?

Dharmender Tuteja — Chief Financial Officer

With our investments in certain rating agencies of what we understand is that the group demand is projected between 6% to 8%, and we expect that our growth would be better than that.

Puneet Dalmia — Managing Director

Image [Phonetic], if I can add, Sanjeev, here. Is it too early to say how inflation is going to impact the housing demand? Housing demand has been kind of muted for the last many years, and there’s a lot of pent-up demand after spending — so base want to balance the inflation is a lot of supply constrained because of old 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, if you ask us, given where we stand as a country in terms of growth trajectory.

And I think even by inflation, I do not see any impact on the demand for infantile spending or for housing other things. So we are working on that model right now. Our assumptions are that we see strong cement demand and just for the next couple of years.

Mahendra Singhi — Managing Director and Chief Executive Officer

I agree.

Indrajit — CLSA — Analyst

Sure. This is very helpful. And I just want to clarify one number. So for 4Q, our coal cost was blended $11 and the spot prices that we are procuring or at inventories $220 to $230. Is that correct? Or there is some mistake my understanding…

Dharmender Tuteja — Chief Financial Officer

Broad rates correct.

Operator

The next question is from the line of Girish Shadri from Spark Capel Advisors.

Girish Shadri — Spark Capel Advisors — Analyst

Firstly, how are you thinking of inorganic opportunities. There were media reports of Dalmia bidding for Holcim assets. So in terms of balance sheet size, 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 for you specifically and also your read on the valuation

Dharmender Tuteja — Chief Financial Officer

Yes. So there have been media reports about forcing wanting to sell has taken on Busan ACC. And I would say that it’s a great news is a great asset to the company as well done. They are large players in the country in sectors are looking good. What gives us a lot of confidence and also actually excise is the fact that there are so many new players who are new to the cement sector also looking at these companies.

The fact that they’re looking at investments in cement and Cana not cheap assets, we’re looking at investing in this sector, it just shows how important the sector is for in the next couple of decades or into and what their expectation of the sector. So it gives us a lot of confidence in terms of our growth trajectory about190 million to 10 million tonnes. — at our position saying that no perspective is going to get rated — there’s a lot of potential sites in the country.

And any level of consultation on this would definitely help you also be able to command prices and of the net price inflation to the customer — so on the means of wear looking at it, I think it’s [Indecipherable]. I would not place to comment on the media speculation. We have a very active solution, which you hit all the opportunities come our way. And switches a part of that would 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 details we worked out as a second opportunity. So I just point, I cannot comment specific on this opportunity.

Girish Shadri — Spark Capel Advisors — Analyst

Got it. Secondly, if you can just talk about the model asset ramp up, how is the ramp-up like? And what is the cost structure or profitability of the asset versus, let’s say, your average profitability at the company level?

Dharmender Tuteja — Chief Financial Officer

One, I would say that our team has been able to commercialize this project, the plant, which was closed for Sand years and had a lot of problems, but then we could cost restarted and then we could start copper-producing month of January. Now ramping up is go and we do expect that capacity lefto70% during the year FY ’23. Cost has gone up mainly on account of energy prices. But otherwise, on Caron or various operating parameters front, in years’ time, it will be almost equivalent to what DalbeGroup’s best figures are.

Girish Shadri — Spark Capel Advisors — Analyst

Okay. So one can expect more than INR1,000 per tonne level even from this asset? Is that the understanding?

Dharmender Tuteja — Chief Financial Officer

So it will be the function of prices in the market, the energy cost that would decide. But at the same time, we have good incentive all with us, like what Mr. highlighted, so that will help us in getting the right EBITDA.

Girish Shadri — Spark Capel Advisors — Analyst

Got it. Lastly, just on the capital allocation part. It’s been a while since you partly offloaded the IX stake. So any thoughts or time lines on the remaining part of the investment…

Dharmender Tuteja — Chief Financial Officer

This has been reviewed and of course, at proprieties take up to upload a benefit. That’s the timing, we cannot comment right now. if I can just see IX is a public company, and we are also potion I cannot comment on the time line. But I think we are seeing demonstrated our intent to offload all the non-tie — and this quarter, if you look at it, we have done the refractive business restructuring, thal sugar also has got fair value.

So I think in terms of the journey, I think we have fully committed journey. Cannot comment on the time as the name is right on [Indecipherable],but we have lended EBITDA negative 0.6%. So as and when we need the money for expansion, and we also have to ensure that we have a good leverage on the balance sheet for that working the way to average cost of capital comes down. So I think you see many factors we would take the right call on the final part. But definitely, we are committed to making Recession Company.

Girish Shadri — Spark Capel Advisors — Analyst

Thank you.

Operator

The next question is from the line of Pulkit Patni from Goldman Sachs.

Pulkit Patni — Goldman Sachs — Analyst

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 talking about sort of hiatus in capacity expansion after 43 after reaching the 48%, which itself is substantial iron deny. — has that got anything to do with this change of hands at Holcim, — so if you could address both of those…

Dharmender Tuteja — Chief Financial Officer

Okay. So would it change anything in the industry dynamics, I think it will depend on who buys it. If it is bought by if we did in the media report that plan as we understand right now, 6 examples have particularly Altius it, it will lead to more consolidation in the industry, right? They have to offer the assets because from a CPF. — We have to see how it plays out. If say, for example, any player buys this asset. That depends on because they’re going to leverage the balance sheet; they also want to look at. It’s not the cheap assets and expensive assets. What does it mean for the pricing in each of the sectors or each of the piles of it? So I think this will definitely change some of the dynamics very difficult to comment on exactly what has happened because it oil depend on the price at which it is bought, who buys bid and what their future state going to be on the site. So I think it’s a bit too early to be able to comment on that at this point of time. In terms of what you said we have put a shortfall. I think there are many factors playing into it, right? There’s too much volatility in the energy prices.

The vol doesn’t seem to be the same place as we saw it probably about 4, 5 months back, while there’s a lot of geopolitical tensions, China shutdown, supply chain disruption, retraction going to it, which has got hardening. And on top of that, now the consolation industry. I think there are many factors which are considered when we look at holistic and you look at a map.

So while you are committed to 110 million to 130 million tons, we still being in a vision and we are working towards them. I think we decided to just delay announcement. And if you look at it, we’ve also been trying to tie up our raw material security to coal block coal — so in line with our strategy, we are already taking a lot of steps. But I think we just decided it’s potent to delay the announcement of further expansion because beyond 4.5 because we want to see what happens on some of these macro factors and also the consideration yield. And then it will be the right time to announce and if you have to publicly our strategy to that also. So I think it was just reserves to investor to announce anything at this…

Pulkit Patni — Goldman Sachs — Analyst

Not sure. Sounds very prudent.

Operator

The next question is from the line of Ritesh Shah from Investec.

Ritesh Shah — Investec — Analyst

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 but 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 aspect which was put on the target net debt to EBITDA, which was less than 2x that there could be a deviation in case of any inorganic opportunity. So just wanted to understand 2 numbers, ROC net debt-to-EBITDA, if at all, for any inorganic opportunities if we had to chase.

Rajiv Bansal — President and Chief Transformation Officer

No, absolutely. Rajiv here. Let me take this and then I’ll ask [Indecipherable] to add further. When you spoke about our ROC, I think we believe that this sector would deliver a ROC of [Indecipherable] — and there is no data point that I’m seeing, which makes [Indecipherable] the case. Yes, could be volatility as we go along because, for example, [Indecipherable] cash flows and returns. And to that extent, we can see volatility rate. But on a long-term view, if you ask you, I think 14% to 15% is what we’re working towards, and I think we’re absolutely capable. A question of what happened in case there’s a large the opportunity carted that last time also when we announced the policy. See, over a 10-year period, we have committed to [Indecipherable]. If for any reason, suppose there’s a great opportunity which comes out way in terms of acquisition opportunity, just because we have announced a net doesn’t mean that we’ll start giving up on opportunities and things like the competition. So in terms of M&A, when you look at the long-term strategy, there are many [Indecipherable] play. This capital allocation framework helps us define what we want to do, the time by intent. But there would always be a few exceptional rate. And the whole idea is that we make exceptions, we come out to everybody, say that these are the reasons we have made an exception — and these are the reasons why you have to do it, [Indecipherable] come back to which the framework. So I think the idea was to place more transparency and also create boundary conditions as to work there. But it doesn’t — we don’t want to tie our hands and legs and say that because this is the policy, we don’t [Indecipherable] beyond that. Because as I told you last year, we announced it, I believe that this sector will see a lot of consolidation because it very segmented market, the top line players only have about 54%, 55% of CapEx shares. And I think you will see a consolation to conduct. We don’t want to shut our eyes to an opportunity to come our way because we also have a sanitation. We also want to be a reasonable sales market that we operate. So if this helps us accelerate the journey — of course, we will look.

Ritesh Shah — Investec — Analyst

Very, very fair. Sir, my second question is more from an industry standpoint, like we apologize over here. Sir, we have been quite update about the demand prospects in the country. But given the railroad and energy basket has been moving up and also the construction cost, 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 scenario crude hypothetically remains at $115? There is price elasticity of demand, that is something which is real. So how do you balance the two variables, just a very hypothetical situation, but if the situation had to continue for the next six months, how do you visualize that?

Puneet Dalmia — Managing Director

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 if 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. But we are not seeing a drastic demand contraction yet. In fact, I was even seeing the rural economy Mahindra and Mahindra numbers were for April. The 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 — so partly, it’s 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 a significant headwind. 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 six months at least, as I see it.

Ritesh Shah — Investec — Analyst

That’s very useful. Just last one question for [Indecipherable] sir. We have done a phenomenal job on green fuel. I just wanted to understand on a rupees per [Indecipherable] basis, how should one look at it? Is it — does it do good on the overall rupees per [Indecipherable] for the fuel cost? Or is it like you are chasing ESA hence, you are okay to spend a little bit more for ESG?

Mahendra Singhi — Managing Director and Chief Executive Officer

It will be always economical as well broadly to be stable, and it will be maybe 20% or something lower than the fuel prices, but all defects on another fuel prices. We are spending money for the right plants investing so that we can use it in a right way. As well, we are also able to avoid usage of [Indecipherable], which also helps us in bringing down our carbon footprint and making the globe better.

Ritesh Shah — Investec — Analyst

Sure, sir. Thank you so much for the answers.

Operator

The next question is from the line of Amit Murarka from Axis Capital Limited.

Amit Murarka — Axis Capital Limited — Analyst

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%?

Mahendra Singhi — Managing Director and Chief Executive Officer

Yes. Like we said earlier, our capacity of cement would be $50 million done by March 23. And then rest would be commissioned in FY ’24 so that we become 48.5 million tonnes in the company by March 24.

Amit Murarka — Axis Capital Limited — Analyst

That I understand. I was just like wanting to know if it is possible to have a [Indecipherable] breakup just as you shared for WHR solar.

Mahendra Singhi — Managing Director and Chief Executive Officer

The balance maybe 0.6 million tonnes would get added in the next three months in cement and the balance would be the second half for the year FY ’23. And in FY ’24, maybe two or three million tonne may get added in the first half balance and second half.

Amit Murarka — Axis Capital Limited — Analyst

The balance maybe 0.6 million tonnes would get added in the next three months in cement and the balance would be the second half for the year FY ’23. And in FY ’24, maybe two or three million tonne may get added in the first half balance and second half.

Mahendra Singhi — Managing Director and Chief Executive Officer

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 replicon. And we are quite hopeful that in time to come, the growth of demand in India would be better in years to come, and the lows help us better capacity. Difficult to come in to set number, but then yes, it will go on year-by-year.

Amit Murarka — Axis Capital Limited — Analyst

Okay. Sure. And just a 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?

Mahendra Singhi — Managing Director and Chief Executive Officer

Say, around 55%, 60%.

Operator

The next question is from Shravan Shrah of Dolat Capital.

Shravan Shrah — Dolat Capital — Analyst

Sir, a couple of data points. First of all, trade nontrade shares for this quarter and for full year and also the lead distance for fourth quarter and for the full year.

Aditi Mittal — Head Investor Relations

I see mix for the quarter has — is about 65%. And on the lead distance for the quarter, we are at 318 kilometers.

Shravan Shrah — Dolat Capital — Analyst

Okay. So the lead distance has gone up versus last quarter, it was INR28, so 318. So that would be the reason in terms of the increase in the freight cost. 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 about INR8,500 crores to INR9,200 odd crores. So out of that, how much already we have done till FY ’22? In FY ’23, we have said INR3,000 2,000, [Indecipherable] 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?

Mahendra Singhi — Managing Director and Chief Executive Officer

Yes, FY ’22, we spent about INR1,900 crores. And FY ’23 budget, as we cater is about INR300 crores to INR2,500 crores in FY ’24, another about INR300 crores to INR400 crores on still go in the coming year, which is also the cost that’s incurred but cash flow was just up to slightly less after the commission also.

Shravan Shrah — Dolat Capital — Analyst

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 that — so you say 0.6 million to come in the next 3 months. But if you can open the regents Page 7 and if you can help us would be better which region would be coming in FY 234 million tonnes, that will be coming 4.1 and the next capacities. So that would be helpful because there is not much clarity on that part.

Mahendra Singhi — Managing Director and Chief Executive Officer

I may answer that all on greenfield and brownfield will come in the 4 million tonne of cement expected in FY ’23 is spread across regions and Steve build a out, but look at commercialize giving that 23 part of the cement debottleneck in the [Indecipherable].

Shravan Shrah — Dolat Capital — Analyst

Sorry, Ajei, 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 last, if you can repeat.

Puneet Dalmia — Managing Director

Bihar will also be in FY ’24. The risk that comes in during FY ’23 is the debottlenecking, which is across our plan.

Shravan Shrah — Dolat Capital — Analyst

Okay. Okay. Okay. That’s it from my side. So last one, in terms of the price increase, in this April, so versus the third — fourth quarter average, how much we have seen the increase on an average?

Mahendra Singhi — Managing Director and Chief Executive Officer

I would say there has been somewhat price increase on account of cost interest in East and Northeast, but there’s hardly any price increase in south. And if the price decrease must be different states edging from, say, INR10 to [Indecipherable].

Shravan Shrah — Dolat Capital — Analyst

Okay. So is only INR10 crores to INR15 increase we have seen versus the — from the last ins-out nothing, no increase.

Dharmender Tuteja — Chief Financial Officer

You are right.

Shravan Shrah — Dolat Capital — Analyst

Okay, Sir. Thank you. All the best.

Operator

Thank you. The next question is from the line of Navin Sahadeo from Edelweiss Financial Service. Please go ahead.

Navin Sahadeo — Edelweiss Financial Service — Analyst

Yes. Am I audible?

Dharmender Tuteja — Chief Financial Officer

Yes, you are.

Navin Sahadeo — Edelweiss Financial Service — Analyst

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 ratio that we were trying to improve, where are we? And how do you see this CO2 per ton reduction road map? Thank you.

Mahendra Singhi — Managing Director and Chief Executive Officer

So two things. One, since we have started the old plant of Worley as well as the old plant of Palanpur, which is DDSPL. On that account, in those 2 plants, the Q2 emissions were higher in compared it to our all modernized their 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 sudden 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 excels are on, and we are quite hopeful that we’ll be able to make good inroads more in next 2 years.

Navin Sahadeo — Edelweiss Financial Service — Analyst

Sir, if you have the blending percentage handy with you or I could take it later.

Mahendra Singhi — Managing Director and Chief Executive Officer

Okay. 78%.

Navin Sahadeo — Edelweiss Financial Service — Analyst

78%? Okay. Okay. My second question then was about this alternate fuel or green fuel, as you call it, a 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 get or prepared are we on this front to handle that?

Mahendra Singhi — Managing Director and Chief Executive Officer

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 selling. So we have done both, and that’s why we have been able to ramp up. Initially, when we start using a higher percentage output in fact does come, but then with the various improvements in processes also as well as the stabilization of the equipment, which we put in, we are able to manage that. And I may tell you that we have become the first industry to put up for chloride by bar system or on account of which 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, getting our own people, getting the right material and third, putting up the right plan with the petrology we’ll be able to use a higher percentage.

Navin Sahadeo — Edelweiss Financial Service — Analyst

Sir, appreciate.

Mahendra Singhi — Managing Director and Chief Executive Officer

So for the full year, it will be close to about INR200 crores. And the last quarter itself could be around INR90 crores.

Navin Sahadeo — Edelweiss Financial Service — Analyst

Full year INR200 crores, last quarter INR90 crores.

Dharmender Tuteja — Chief Financial Officer

Yes.

Navin Sahadeo — Edelweiss Financial Service — Analyst

Great. Thank you. Thank you so much.

Operator

Thank you. Next question is from the line of Rati Kumar from Jefferies, India. Please go ahead.

Rati Kumar — Jefferies, India — Analyst

My first question is on the expansion outlook post FY ’24, which you said is a pause as of now. So does that — I mean, as I understand, these expansions were in North and Central mark. So does this impact or like — I mean there was this change in MDR at for which I think you were looking to expand faster or early lights. So does anything change on that front?

Mahendra Singhi — Managing Director and Chief Executive Officer

As far as a 48.5% is concerned, this is all in our existing region where we have all right disposes. So there is no impact on that.

Rati Kumar — Jefferies, India — Analyst

No. So I’m asking beyond 48.5%.

Mahendra Singhi — Managing Director and Chief Executive Officer

So we are exploring various opportunities and we have been also able to get a few blocks also like one block in Latam, which was highlighted in last call. So both actions are in process. And surely, when we quantify and concretize we’ll share with you.

Rati Kumar — Jefferies, India — Analyst

Secondly, what will be our fuel mix right now? And when we say that fuel mix, what will be our fuel mix right now? And when we say that our cost of fuel went up from INR150 to INR181, does this also include some implied domestic coal and greenfield prices or is just for imported coal?

Mahendra Singhi — Managing Director and Chief Executive Officer

So this price is in relation to the petcare which we consume India and imported as well as the imported core.

Rati Kumar — Jefferies, India — Analyst

The fuel mix of standard pet coke is around 64% and rest of the fuels other than [Indecipherable]

Mahendra Singhi — Managing Director and Chief Executive Officer

And how this fuel this will be quite dynamic depending on the prices of imported coal or pet coal as well as the availability of Indian coal…

Rati Kumar — Jefferies, India — Analyst

Okay. So 36% include domestic coal and imported coal both?

Mahendra Singhi — Managing Director and Chief Executive Officer

Yes, yes. as well the [Indecipherable]

Rati Kumar — Jefferies, India — Analyst

Okay. And one last question, sir. When you — while you alluded on year-on-year growth for FY ’22, like south through double digit is for a small decline. Can you highlight the same for like Coke? — for fourth quarter, how did the South and Eastern performed when you had like a 3% growth. So how did the regional performance for…

Mahendra Singhi — Managing Director and Chief Executive Officer

So I would say that we have done better in South and Northeast. And yes, we could recover the losses which we had earlier…

Rati Kumar — Jefferies, India — Analyst

Thank you…For all the answers.

Operator

Thank you very much. Ladies and gentlemen, we will take that as the last question. I now hand the conference over to Mr. Dalmia for closing comments

Puneet Dalmia — Managing Director

Hello?

Operator

Go ahead sir, your audible.

Puneet Dalmia — Managing Director

Sorry, I’m unable to hear the voice is not clear, sorry.

Operator

So, would you like to give any closing comments?

Puneet Dalmia — Managing Director

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’s 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 in all of you.Thank you.

Operator

[Operator Closing Remarks]