Dalmia Bharat Limited (NSE: DALBHARAT) Q3 2025 Earnings Call dated Jan. 22, 2025
Corporate Participants:
Puneet Dalmia — Managing Director and Chief Executive Officer
Dharmender Tuteja — Chief Financial Officer
Analysts:
Rajesh Ravi — Analyst
Indrajit Agarwal — Analyst
Amit — Analyst
Ritesh Shah — Analyst
Jashandeep Chadha — Analyst
Satyadeep Jain — Analyst
Sumangal Nevatia — Analyst
Raashi Chopra — Analyst
Pulkit — Analyst
Rahul Gupta — Analyst
Prateek Kumar — Analyst
Shravan Shah — Analyst
Jyoti Gupta — Analyst
Naveen Sahadev — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning, and welcome to the Earnings Conference Call of Dalmia Bharat Limited for the Quarter and Nine-Month Ended 31st December 2024. Please note that this conference call will be for 60 minutes and for the duration of this call, all participant lines will be in the listen-only mode. This conference call is being recorded and the transcript may be put up on the website of the company. After the management discussion, there is an opportunity for you to ask questions. Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. As a reminder, all participant lines will be in the listen-only mode. 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. These statements are based on expectations and projections and may involve a number of risks and uncertainties such that the actual outcome may differ materially from those suggested by such statements. On the call, we have with us Mr Puneet Dalmia, Managing Director and CEO; Mr Dharmendar, Chief Financial Officer; and the other management of the company. I would now like to hand the conference call over to Mr Dalmia, Managing Director and CEO. Thank you, and over to you, sir.
Puneet Dalmia — Managing Director and Chief Executive Officer
Good morning, everyone. Let me begin with an overview of the quarter and then will take you through our operational and financial metrics. India continues to stand-out globally as we remain one of the fastest-growing economies. However, the start to the year has been slow with general elections in-quarter one, heavy monsoons in-quarter two, impacting overall economic activities and output. As a result, GDP growth dropped to a seven-quarter low of 5.4% in Q2. Despite this slowdown, I believe India’s structural growth drivers are strong and that the real GDP growth should bounce-back from here. We are just a few days away from the announcement of next year’s budget. While I feel that this year may experience some slippage in the budgeted capex spending. I remain optimistic that our government will double down its focus on the investment-driven growth and fiscal consolidation, while supporting private sector investments. These efforts are crucial to steering back India towards a robust growth trajectory of 7% to 8%. During the quarter, cement demand growth in India fell short of our expectations due to lower-than-expected government spending, state elections and unseasonal rains. As per various macro data points and the reports estimate, cement demand grew modestly by low-single digit in Q3 of FY ’25. In November, the government capex has increased by 21% Y-o-Y, utilizing 46% of the budgeted capex till November. Typically, government spends about 40% of the allocated budget in the last four months. Even after assuming this run-rate, capex spending should improve by about 20% on a Y-o-Y basis in December to March period. With this, along with the seasonally strong quarter for construction activities, we believe that the cement demand can grow at a 6% to 7% rate on a Y-o-Y basis during Q4, which translates into a full-year growth of 3% to 4% Y-o-Y. During quarter three, our volumes degrew by 2% on a Y-o-Y basis, primarily because in the same quarter last year, we had 0.37 million tonnes of tolling volume from JP plants. Sales from Dalmia plants grew 3.7% on a Y-o-Y basis in this quarter. If I talk about cement prices, there is a growing sense of optimism. We have seen some price improvements in December and expect further increases in Q4, driven by stronger demand. However, increasing competitive intensity may cap any significant gains on this front. While market — while prices remain market-driven, we are working consistently on the cost-reduction front. While we are one of the lowest-cost cement producers, we are committed to further deepen our position by realizing the cost-savings of INR150 to INR200 per ton through internal measures by financial year ’27. We are on advanced-stage to reach 49.5 million tonnes of cement capacity by end of financial year ’25. We will further announce our Phase-2 expansion to reach 75 million tons by financial year ’28 within the next six months. I’m also proud to share that to commemorate our 75 years in Odissa, we have inaugurated a Badminton Academy called the Shuttle in. This academy will provide world-class coaching to deserving young athletes from Odissa and help them shine on the world stage. This is a joint initiative of Bharat, Government of Odissa; and National Badminton Coach and, Mr Chan. This initiative embodies our values to give back to the communities that we serve. Now I will request to take you through the detailed financial performance for the quarter gone by. Thank you.
Dharmender Tuteja — Chief Financial Officer
Thank you, Puneji. Good morning, everyone. Let me take you through the key aspects of our performance. As mentioned, our volumes degrew by 2% Y-o-Y to 6.7 million tonnes during the quarter, but sales from Dalmia plants grew 3.7% Y-o-Y. On Y-o-Y basis, revenue declined by 12% Y-o-Y to INR3,181 crores due to a sharp decline in cement prices on a yearly basis. However, on Q-o-Q basis, since there was a reasonable price improvement in the month of December, our revenues improved by 3%. In January 2, the prices seem to be holding up so-far. We were able to improve our trade mix to 66% from 53% last year, while premium product mix improved to 24% during the quarter from 21% in Q3 FY ’24. Moving on to the cost line items. Our raw-material cost during Q3 marginally declined by 2% to INR765 per tonne of cement production on a Y-o-Y basis due to reduction in input costs, mainly fly ash and limestone phasing cost. And fuel cost declined 9% Y-o-Y to INR1,005 per tonne of cement production with $26 decline in the fuel consumption cost on a Y-o-Y basis, an improvement in RE from 30% to 33%. During Q3 FY ’25, the fuel consumption cost was $96 per ton as against $101 per ton in Q2 FY ’25 and $122 per ton in Q3 FY ’24. Fuel cost during the quarter stood at INR1.31 on KCL basis. However, on a quarterly basis, our benefit of lower fuel prices was largely offset with reduction in RE share as we had a shutdown in few plants impacting WHRS output. It is now up and running and therefore RE power should improve from this level. During the quarter, we have commissioned 4 megawatt of solar power capacity at, West Bengal totaled 46 megawatt of RE capacities also commissioned under group captive arrangements during the quarter. This takes our total operational RE capacity to 252 megawatt. We continue to enter into multiple renewable power agreements under the group captive arrangement. We have additionally signed group captive agreements for 21 megawatt capacity of RE Power in Q3 FY ’25. This is in addition to 278 megawatt capacity signed till September or in H1 FY ’25. In total, we have signed 299 megawatt of long-term renewal power agreements under the Group captive arrangement so-far. By end of FY ’25, we should have total operational RE capacity of 267 megawatt, including 57 megawatt from group captive arrangements and other smaller captive capacities. We expect to exit FY ’25 with about 40% to 45% RE power share in our overall power mix on consumption basis. Coming to the logistic cost during the quarter, our logistic cost increased by about 2.7% on a Y-o-Y basis to INR1,120 per ton due to supply to central market from Eastern plants upon discontinuation of JP tolling arrangement and also high clinker movement costs due to plant shutdown amidst debottlenecking activities done during the quarter. Having said that, we were able to optimize our lead distance, which reduced from 27 kilometer in Q3 FY ’24 to INR269 k kilometer in Q3 FY ’25. Our EBITDA during the quarter declined by 34.5% Y-o-Y to INR511 crores, primarily due to weak cement prices. This works out to INR765 on per ton basis. During the quarter, we accrued INR102 crores in incentives with collections totaling INR122 crores. Also in the quarter, we have received an extension of incentives for one of our plants for an additional two years, effective from 1st April ’24. Consequently, an additional incentive of INR14 crores has been accrued for the previous two quarters in the current quarter of Q3 FY ’25, which is included in INR102 crores. We are expecting total incentive accruals and collections to be around INR325 crores for the full-year. Incentive outstanding on 31st December declined to INR760 crores. Depreciation during the quarter was flattish on a Y-o-Y basis, but increased by about 8.3% Q-o-Q to INR364 crores as certain equipments were replaced during the debottlenecking exercise on which an accelerated depreciation was charged during the quarter, which led to this increase. Full-year depreciation for the current year is expected to be around INR1,330 crores to INR1,340 crores. Coming to the ongoing projects, we have increased our clinker capacity to 23.5 million tonnes through debottnecking at Karappa and Raj Gangpur. We are near commissioning our 2.4 million ton grinding unit in Northeast and 0.5 million ton in Bihar. Our clinker unit in Northeast is also in advanced-stage and we expect it to commission in Q2 of FY ’26. During the quarter, we have incurred capex of about INR657 crores with majority being spent on the before mentioned projects. We expect for capex — we expect capex for FY ’25 to be about INR3,000 crores, which is largely towards Northeast and Bihar capacity expansions, land for future projects and some cost-reduction projects and besides the maintenance capex. With regards to debt, as of 31st December, our gross debt increased to INR5,457 crores. Net-debt also increased to INR1,242 crores, resulting in a marginal increase in net-debt to EBITDA at 0.55 times. Our comfortable leverage ratio positions us well to initiate the next phase of expansion. With this, I would now like to open the floor for questions. Thank you very much.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use their handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Rajesh Ravi from HDFC Securities. Please go-ahead.
Rajesh Ravi
Hi, sir, good morning. My first question pertains to the volumes. Sequentially, the volumes are flattish. Could you throw some light that given that seasonally Q3 is expected to be better than Q2, why we haven’t been able to deliver volume growth? And while the tolling argument with Dalmi JP has been stopped, but we are still shipping volumes from our East plants. So how much is the volume and you know why should we not when we are already underutilized, why should we see that Y-Y we have still grown fixed of tolling.
Puneet Dalmia
I think, you know, as we said that the market growth has been in low-single digit in our view. And you know, if we look at this quarter, the production — the sales volume from plants has been around 3.7%. We are serving some of the central markets, but we are not serving all markets from Darnia plants. And I also think that if I look at the nine-month performance, our growth is ahead of the industry growth. So I think overall, there has been a macro slowdown and that macro slowdown has definitely impacted the overall growth for every company. However, I think on a Nine-Month basis, our growth has been faster than the industry growth.
Rajesh Ravi
Okay. And in terms of what would be your clinker utilization for the nine months period at least for maybe Q3?
Puneet Dalmia
I think we don’t give a clinker utilization numbers. You know we share our cement volume numbers and our CC ratio keeps changing depending upon what’s the demand in the market and what product mix we sell. And you know,
Rajesh Ravi
And lastly,, sir, could share some of the housekeeping numbers like blended cement, traded, cement, premium sales, yeah, this fuel mix and the CC ratio, please?
Dharmender Tuteja
Sure. CC ratio for this quarter improved to 1.7, which was 1.64 in the previous quarter. And trade sales I already covered in my remarks, it improved to 66%. The premium product also has improved from 22.4% in the last quarter to 24.2% this quarter. The blended ratio has also improved to 85.1%, which was 82.7% in the preceding quarter.
Rajesh Ravi
The fuel cost.
Dharmender Tuteja
Yeah. Per KKL was 1.31%, which I covered in my opening remarks. And the road percentage is 87%.
Rajesh Ravi
Okay. Great, sir. I’ll come back-in queue. Thank you.
Puneet Dalmia
Thank you, Rajesh.
Operator
Thank you. The next question comes from the line of Indrajit Agarwal from CLSA. Please go-ahead.
Indrajit Agarwal
Hi, thank you for the opportunity. My first question is on the accident at Raj Gingapore. So what is the kind of impact is the plant up and running now? And what kind of maybe a volume or profitability impact we can see in 4Q.
Puneet Dalmia
Yeah, I think, you know, first of all, we have received the first assessment report and it’s a very unfortunate accident. Board has also acknowledged it and we are taking action and we are — we fully remain committed to safe working environment. You know this accident happened in our power plant, which is a captive power plant and you know that power plant is shut for now till we take all the corrective measures. It is not going to impact production in any way, but it may increase our power cost slightly because we’ll have to purchase power from the grid instead of supplying it from a captive power plant.
Indrajit Agarwal
Any quantum that you can highlight now?
Puneet Dalmia
No, I don’t think we can highlight a quantum right now.
Indrajit Agarwal
Okay. Thank you. My second question is on the management bandwidth and the transitions that we have seen of late, the recent one being of Mr Bansal. So how are we rebuilding the team? Are we in advanced stages of hiring people? How do you see that panning out in the next couple of years?
Puneet Dalmia
I think Rajiv has been with us for four years you know he had built a very strong team and a very strong processes internally and I think our team is fully geared up to you know, take forward the agenda that he started along with me and along with our entire leadership team. We are fully equipped to handle it. I think overall, we are — as we — as I said a few quarters ago, are looking at succession planning in every role. You know, we started this exercise with I taking over from Mr and in all roles — all critical roles, talent is being mapped and we are looking at proper succession planning and ensuring that we give opportunities to our internal people as well as wherever needed, we can — we’ll also — we will also recruit people from outside. So I think this is a full detailed planning which is being done and over a period of time, we will we will continue to give you more color on it as and when situations evolve. But I can say that in the last 12 months, I have personally gone very deep into the organization. And I am, you know, happy to see that there are lot of committed and sincere people here and we have been in this business for 80 years there — and we have large ambitions to grow in-line with the opportunity that India offers. We have a very strong team and wherever we need to further strengthen it, we will strengthen it and we will deliver on the ambitions that we have. We always have delivered on the growth aspirations that we took. And I think now we are in a much stronger base with a much stronger foundation and we will deliver on the growth aspirations that we’ve outlined for ourselves.
Indrajit Agarwal
Sure. Thank you. And one last question, if I may. If I look at the monthly demand trajectory based on your on-field experience, has December been meaningfully better than October, November or is it more like well spread-out through the quarter, whatever the demand improvement we have seen?
Dharmender Tuteja
And it has been better of course, the overall quarter-to-quarter increase was not much, but definitely things have started improving because the government spending till, I think October had not picked-up at a feasible pace or that there was a deceleration and number onwards spending has increased, which I’m hoping that should reflect in December also has been somewhat better, but should show some better improvement.
Indrajit Agarwal
Yeah. Thank you so much. That’s all from my side.
Puneet Dalmia
Thank you.
Operator
Thank you. The next question comes from the line of Amit from Axis Capital. Please go-ahead.
Amit
Yeah, hi, good morning. Thanks for the opportunity. On volumes, just wanted to check like while you mentioned that you grew 3.7% on your own plants. How much of that would have gone to Central India that was won as against, let’s say, the 0.37 million ton that was from tolling? And was there any market-share loss for you in any region?
Puneet Dalmia
I think as I have said earlier, we don’t share region-by-region data, but I can only say one broad point that we are not serving all markets of Central India from Dalmia because it is, you know, not long-term viable. Those are not the core markets. Some markets we are serving. And you know, I also want to say that the GP tolling arrangement was in a more spread-out market in both UP and Central India, which from plants we cannot serve and will not serve. So I think to that extent, there will be some — the addressable market is slightly less, but we can’t share with you the regional numbers in-state by state, please.
Amit
Got it. And earlier, I think you’ve been mentioning multiple times that you would be growing at 1.5 times the market. So would you still hold-on to that, particularly given that last couple of quarters actually it’s been a tad weaker than that.
Puneet Dalmia
I think that’s a great question. If I look at our nine-month performance, our belief is that the industry has grown around 1.5% to 2% maybe and growth on a nine-month basis has been around 4%. So the entire trajectory will remain on these lines. But of course, quarter-on-quarter these changes may be there.
Amit
The last question is on Northeast, how much capex would have been spent by now?
Dharmender Tuteja
I think the remaining capex to be spent in Q4 and the next year is about INR1,800 crores.
Amit
Okay, that’s all. Thank you.
Operator
Thank you. The next question comes from the line of Ritesh Shah from Investe Capital. Please go-ahead.
Ritesh Shah
Yeah, hi, sir. Thanks for the opportunity. Sir, couple of questions on Northeast. I appreciate we don’t give region-wise profitability. But if you could give some sense on utilization levels or directionally on the profitability and how much it does contribute at the company-level? So that’s the first question. The second question is, what is our goal sourcing strategy specifically for office plants? The reason to ask this is there have been recent unfortunate events in the region. So just to ensure that we are insulated from any of this rat mining which happens. And lastly, again, the market-leader has actually made indirect foray into the region. So what is our strategy incrementally to combat or ensure that our market-share remains put and we also protect our profitability. Those are the three buckets for Northeast. Thank you.
Puneet Dalmia
Okay. I think, you know, first of all, we are unable to share region-wise numbers. I can only say that we are one of the strongest players in Northeast with a unmatched footprint and unmatched cost structure and a great brand and distribution. I think we have seen that in almost every market, wherever we have done brownfield expansions in-markets where we are already present, those expansions have been very, very low-risk and it gives us instant access to distribution. It gives us — we are an established brand, we have a low-cost structure and our ability to serve the market better than our competitors in this market gives us an advantage. And I think we are quite lucky that the timing of our investment is coming together with a surge in — likely surge in-demand in Northeast. I think we are seeing a lot of announcement in hydropower projects. We are seeing a lot of announcement in infrastructure and also there is a huge push from the Government of India to secure our borders as well as create connectivity of Northeast with the mainland. So I think all this augurs very well with the demand growth projection in Northeast. So I would just say that we welcome competition. Competition always keeps us on our toes, makes us more efficient. But I think we have to look at what will differentiate us, what will ensure that both from a cost structure standpoint, we remain one of the lowest-cost producers and how do we ensure that we are able to serve our customers best with a good brand and a good distribution in-place. And I think all these factors are well laid out in Northeast. We’ve been in that market for 10 years. We see this attract — we see this investment as a very attractive investment opportunity timed with a market which is growing very fast.
Ritesh Shah
So specifically on coal sourcing?
Puneet Dalmia
On coal sourcing. Look, this is a, this is the accident which happened you know, in a, you know mine which was being operated by by you know some from local miners. I don’t think we are doing any coal mining in Northeast. So this is something which local miners have to think about and worry about.
Dharmender Tuteja
So we have enough stock because in Northeast, we maintain enough three to four months of inventory for the fuel and we are sure that there are enough sources which will not cause any disruption in the operations.
Ritesh Shah
So would you try to highlight on our sourcing mechanism? Is it coal India? Is it imported linkage? How should we look at it?
Dharmender Tuteja
There are multiple forces sources, but mostly it is on the local miners as well as some portion comes from the Coal India subsidiaries, but that is very small.
Ritesh Shah
Sir, when we say local miners is a short smaller number, would it be possible for us to quantify it? I’m looking at it more from an ESG standpoint. So it would give a lot of comfort if you could help quantify this.
Dharmender Tuteja
Not impossible, but there are ways in which government is also trying to bring some scientific mining and in the medium-to-long term I think that problem will get addressed.
Ritesh Shah
Okay, I’ll join back the queue. Thank you so much.
Operator
Thank you. The next question comes from the line of Jashin Deep from Nomura. Please go-ahead.
Jashandeep Chadha
Yeah, hi, sir. Sir, I know I understand that you don’t give region-wise data for Dalmia, but just wanted to understand how you are seeing the market industry as a whole, both in East and South for this quarter and going-forward. Do you think that I just want to understand whether East is performing better than South as a market? That’s my first question.
Puneet Dalmia
So you want to understand the overall demand?
Jashandeep Chadha
Yes, sir.
Puneet Dalmia
Okay, I think again it varies state-to-state and I think again in South, some states are growing, some states are de-growing. And in East also, we have seen that a mixed bag. But in general, I think the East market has grown better than the South market so-far.
Jashandeep Chadha
Understood, sir. And sir, my second question is on-net debt. We have seen this quarter also net-debt has increased significantly. Last quarter also we saw that. So any major components for this net-debt increase? And what’s the sustainable net-debt level that the company feels comfortable with.
Dharmender Tuteja
In the current quarter, the net-debt increased on the preceding quarter, basically about INR300 crores was due to the IX price which went down during the quarter and average INR300 crores was because of the capex or other costs which were not fully covered by the internal cash accruals. So I don’t expect that even in-spite of the capex, which is going to be spent in the coming quarter about INR1,000 crore-plus, our net-debt is not going to increase by the end-of-the year. And even the next year also, only increase will happen, net-debt will be on account of the new capacity expansions, otherwise net-debt will not increase.
Jashandeep Chadha
Thank you, sir. And just one last I just want to reconfirm that the incentives for this quarter were INR102 crores. 4th-quarter capex is around INR1,800 crores and FY ’26 capex is around INR3,000 crores. Is my understanding right?
Dharmender Tuteja
No, no, the fourth — the total year we said is about INR3,000 crores. And till nine months, we have spent about INR2,040 crore or so. So about INR1,000 crore capex will come in the Q4. And next year capex will be in the range of about INR2,500 crores to maximum INR3,000 crores, but this will also include the land investment, which I’m not clubbing with the announcement of the new capacity. So INR500 crores of land also is covered into this. So otherwise, INR2,200 crores to INR2,500 crores capex in the coming year will be sufficient for us.
Jashandeep Chadha
Understood, sir. And INR102 crore was the incentive amount for this quarter, right, sir?
Dharmender Tuteja
That’s right.
Jashandeep Chadha
Okay. Thank you so much, sir. I’ll join back the queue.
Puneet Dalmia
Thank you.
Operator
Thank you. The next question comes from the line of Satyadeep Jain from Ambit Capital. Please go-ahead.
Satyadeep Jain
Hi, thank you. First, please want to ask on volumes. As you can understand from all these questions, if we strip out the sales to Central India, it does look like in the core markets, seems to have lost market-share in this quarter. Just wanted to understand that in the last few quarters, there’s been a lot of volatility, some quarters higher-growth than the peers, some in lower pricing growth, some quarters it’s the opposite. And there has been churn in management team, there has been learnings from trying to enforce pricing discipline. Just wanted to understand what have all the learnings been from this volatility in the last few quarters and the changes in the sales strategy and team and how do you look at the stabilization in team and strategy as you look at volume growth versus pricing in the next maybe one year or so.
Puneet Dalmia
No, I think as I said, our long-term initiatives remain the same. You know, we will continue to invest in a strong brand. We will continue to invest in a more retail distribution channel. And you know, we will make sure that in each of our markets, we premiumize our product mix as well as continue our low-cost position. So I think our you know, overall you know direction remains the same. Quarter-to-quarter, there will be variations you know and I think I my, my only only you know, feeling is that over the next three to five years, you know, we want to build a culture where we can compete on practices as you know and not on price. So I think we want to build a, you know, culture where distributors can work with us as long-term partners and there are, you know, some anomalies in pricing in this industry, which we hope we can bring more transparency in and you know, I think these are initiatives which will take some time to play-out, but our long-term direction remains the same. And I think my overall learning in terms of last few years has been that whenever we you know, undertake a great like a big phase of expansion, you know, the company has to reinvent itself. We have to see — we have seen it from a — when we went from 1 million to 10 million tons, we’ve seen it from 10 to 30 million tons. Now we’ve reached 50. And I think the journey from 50 to 100 will be that of people, processes and culture. Along with the very strong focus on governance and creating a foundation to manage a large institution. So I think we are working towards this diligently and these are things which will play-out over the next three to five years.
Satyadeep Jain
Fair enough. Just second question would be on the processes. So there have been two separate incidents in the last week, including one in Assam also. And there has been other companies also including an incident in earlier this year. So just as a company, you obviously have the coverage portal, you have silver contractor audits and all. What — what do you think maybe remedial actions you think need to be strengthened for you and the entire industry to prevent some of these accidents? And do we have, in addition to net zero, everybody talks about net zero, but is the industry talking about maybe lot time injury targets or safety targets for the next few years.
Puneet Dalmia
I think this is a you know matter which is of immense importance to me personally as well as our Board and our entire leadership team you know we want to provide a very safe working environment where human life is immensely valued and there is zero tolerance to any incident which causes loss of human life. I think, you know, apart from creating very strong processes and ensuring that people are well-trained and we continuously raise awareness about safety and create a lot of cross checks on this. I think there has to be a personal ownership at every level to ensure this. I think you know, and every incident needs to go back into a very rigorous root cause analysis and there has to be continuous learning from it. So I would just say that we are taking a lot of steps and putting in a lot of management time on this to ensure that things — things don’t happen, which are so tragic and which are so painful. But it is all about building a safety mindset right down to the grassroot level. I mean, I’ll just give you a small example. I still see people when they are working, they use mobile phones. And I think we have banned this in — we’ve taken a decision to ban this in our plants. But again, implementing this with that kind of rigor, you know, is sometimes just make sure that the safety culture penetrates to the last level I can just say that this is a matter of serious, serious importance in the in the company and the whole group and you know we will do whatever it takes to ensure that such incidents are absolutely eliminated hopefully and at least our systems and mindset to the last level is such that there is highest-level of awareness of these issues. I don’t want to comment at an industry level. I think we want to learn from best practices you know across other industries as well. And I think I can just say that as a cement industry, everybody — all my colleagues in the industry are also equally, you know, aware and response — feel very responsible about this issue.
Satyadeep Jain
Okay. Thank you.,
Puneet Dalmia
You want to add anything?
Dharmender Tuteja
And I think aspect has been discussed there in a very, very serious manner in the entire leadership as well as across all plants. So and the learnings are being replicated across other plants as a preventive measures. And I think the whole team, of course, very, very-high importance to ensure that we have no lost I think life as well as the lost-time injury time also is minimized.
Satyadeep Jain
Okay. Thank you.
Puneet Dalmia
We are building safety champions in each zone of our plants. You know, we are also ensuring that there is a lot of time spent in training people and also not just our internal people, but also the contractors who work with us. And you know, all our unit heads and our national manufacturing head will have their KRAs you know linked to this very, very important parameter.
Satyadeep Jain
Thank you.
Operator
Thank you. The next question comes from the line of Sumangal Navatia from Kotak Securities. Please go-ahead.
Sumangal Nevatia
Yeah, good morning. Thanks for the chance. My first question is to understand the rationale of supplying in the central region. So are we still hopeful of winning back JPF? And if — yes, if you could just share what is the update and the status of the NCLT process and the JPF? And are we right in assuming that the supply to the Central India would be at very low incremental margins versus our core regions.
Dharmender Tuteja
See, as you would have known in the public that there was a process of first there was a appeal against the admission of NCLT by the suspended directors, which was declined by. And I understand even the Supreme Court has also not favored that. And on the loan side, banks have run the process of selling their loans to. And so-far Narsal stands the undisputed bidder for this and we expect that this transition of loans to Narsal should happen in the next one or two, two months. And I think that will cook on the process because there’s only one decision-maker versus 29 banks or 25 plus banks deciding the whole matter, which takes a very, very long-time to decide. And of course, we are still hopeful that we will be in the fray to acquire cement assets of Jal and that is the reason we continue to maintain our presence in the markets which we can service from our regions of East region profitably. And of course, these sales are a bit accretive, but not EBITDA per tonne accretive. So naturally, the margins are lower than rest of the company also on the cement sales. But I think this is a right strategy we believe in.
Sumangal Nevatia
And sir, what sort of timeline are we looking at for this NPLD purchase to kind of go to the next phase.
Dharmender Tuteja
So it’s very difficult to comment because there are — total IBC process can take quite long, but there could be other ways within the IBC.
Puneet Dalmia
And there are a lot of litigations also in this. So I think it’s very hard to comment how quickly this process will conclude. But I think as said, you know, clearly because is the — there are fewer decision-makers now, hopefully the process will get speedened up, but you know it’s very hard to comment how quickly it will get concluded?
Sumangal Nevatia
Understood. Understood. Sir, my next question is on our expansion plans beyond 49.5 million tons. So are we on-track to give some firm plans on a bottom-up basis sometime in the coming quarter by end-of-the financial year. And do we expect some bit of organic plans in new regions like Central North in the next phase of expansion?
Puneet Dalmia
So, I think I have already said that you know we will share our plans you know in July and I think we will stick to that timeline.
Sumangal Nevatia
Okay, understand. I mean just following-up, I mean, overall from a capital allocation framework, I mean, is this low utilization also a point of consideration? And given that we are in the range of 60 65 of maybe not able to grow beyond the market like always, is there a case to delay expansion even beyond maybe next one or two years?
Puneet Dalmia
Sumangal, I’ve told you all that utilization is not the same across all regions. And I think you know, please trust us that we factor-in utilization and market growth when we think about our expansion plans. So you know, we don’t have to worry about the fact and we make these investments with a long-term horizon. I don’t think know we are we are going to look at our capital allocation strategy along with our strong balance sheet. We have said that we don’t want to take net-debt to EBITDA beyond 2x until there is a large acquisition or something strategic which comes up. And I think we will stay within that capital allocation framework. And yes, utilization and long-term demand growth and market structure will play a role in our decision-making.
Sumangal Nevatia
Got it, got it. That is very reassuring. Just one clarification. Is there any amount of previous year — previous period incentive in this result, I think there was something mentioned in the opening remarks, but I misnoting it.
Dharmender Tuteja
Yeah. So in one of the plants, we got extension of the incentives effective from 1st of April. So there is accrual of incentives for nine months — of course, the previous period is last six months for which amount is INR14 crores, included in the INR102 crores incentive booked.
Sumangal Nevatia
So it is booked in the 3rd-quarter
Dharmender Tuteja
3rd-quarter, INR14 crores pertain to the first-half of the current year.
Sumangal Nevatia
Got it. Got it. That is very helpful. Thank you and all the best to the team.
Puneet Dalmia
Thank you,.
Operator
Thank you. Thank you. Ladies and gentlemen, we request you to restrict to one question per participant. The next question comes from the line of Rashi Chopra from Citigroup. Please go-ahead.
Raashi Chopra
Just continuing on the incentive question. So the plans that you’ve got an extension for it for two years you mentioned, right?
Puneet Dalmia
That’s right.
Raashi Chopra
So what should be the normalized level of incentive for the next year FY ’26?,
Dharmender Tuteja
Close to about, I think INR90 to INR100 per ton.
Raashi Chopra
Okay. Secondly, on the volume side, anything for the 4th-quarter and December, like what are you expecting of full-year volume growth to range?
Dharmender Tuteja
See, as you said that in the Q4, we expect the growth to increase by about 6% to 7% and of course, we had a last year high-volume, but still we are optimistic that we’ll be growing rapidly and show the growth in-line with our trajectory, what we aspire to maintain 6% to 10%
Raashi Chopra
Was for the industry hey, can you hear me?
Operator
Ladies and gentlemen, we have lost the line of the management. Please stay connected while I join back the management Ladies and gentlemen, we have the management connected., if you can please proceed with your question once again.
Raashi Chopra
Thank you. Thank you. Sorry. Just clarifying on the volume growth you indicated 6% to 7% is for the industry or for your boot?
Dharmender Tuteja
That is for the industry. Yeah, for this year, we will not like to give a quarterly guidance, but I think as you said, we’ll aspire to remain one of the leaders.
Raashi Chopra
Okay, understood. On the power cost, anything for the 4th-quarter will they be lower or flattish?
Dharmender Tuteja
It will be lower, of course, because the RE power will increase this quarter we ended at 33% and next quarter we expect it to go to about 40% to 45%.
Raashi Chopra
Okay. And just last question for me. Are you still maintaining your cost-reduction targets of about INR150 to INR200 over the next three years?
Dharmender Tuteja
That is right.
Raashi Chopra
Okay. That’s it. Thank you.
Dharmender Tuteja
Thank you.
Operator
Thank you. The next question comes from the line of Pulkit from Goldman Sachs. Please go-ahead
Pulkit
So most of my questions are answered. One question on the cost-reduction, INR150 to INR200 that you spoke of by FY ’27. Now that you are at the helm of things for a while, is most of this cost-improvement coming via change in energy sources, logistics, etc? Or are there also internal costs which you think you could cut in order to achieve this? So how much of this is just change in power sourcing, et-cetera? And how much of this is internal controls, etc., which could drive this kind of cost-saving that you’re targeting?
Dharmender Tuteja
So all this is primarily through the internal initiatives. So I’m not factoring in any price changes in the pet coke or gold prices, which we, of course feel that it’s for the entire industry. But all these initiatives which will come will be come in the form of some ROI improvement projects, which will reduce the power consumption cost this heat consumption, etc. And there’ll be some initiatives like mix change, et. And in the logistic also as we are progressing that the leads will get reduced and there are other initiatives which will bend on the cost
Pulkit
For example, leads will get reduced because if the expansion in capacity isn’t significant, what is going to drive reduction in leads?
Dharmender Tuteja
So focus towards the nearer markets.
Pulkit
Okay. And is there a rough breakdown of the 150 to 200 across sub-segments, what you are thinking?
Dharmender Tuteja
We had said that about this 100 to 125 will be in the VC field and about 30 to 75 will be in the logistics field, that broad breakup I had given in the July call.
Pulkit
Yeah. Okay. And this doesn’t include any sort of changes that Puneet spoke of in terms of how the dealership or dealer discounts, et-cetera should work because I think there’s some streamlining your work doing on that front as well.
Dharmender Tuteja
Yeah, that is on the NSR part, that is a separate initiative, but of course, this is on the cost side, primarily on the variable-cost and the logistic cost.
Pulkit
Okay, that’s it from my side. Thank you.
Dharmender Tuteja
Thank you.
Operator
Thank you. The next question we have from the line of Rahul Gupta from Morgan Stanley. Please go-ahead.
Rahul Gupta
Yeah, hi. Thanks for taking my question. So one question for you, Puneet and sorry for harping on this again. Can you help us understand how competitive landscape is evolving in East and South market specifically? Just trying to understand if you continue to grow at, say, 1.5 times of industry, will that come at the expense of cement prices over the next couple of years? I know you made a point that processes shift would take three to five years, but just trying to understand what would happen over the next couple of years. Thank you.
Puneet Dalmia
I think, look, you know, again, in terms of the competitive landscape, I see two or three things. Now one, I think consolidation will continue. We have said this earlier also both because a larger part of the organic growth will go to larger players and there will be. So I think that story is playing out. I think consolidation will further accelerate in this industry. The second part is, I think every industry goes through a time of where the players prioritize a volume over value. I think this is the time when everybody is aggressive and going for market-share. And I think there is a — there is added headwind because of the lack of demand growth in the first-nine months. As you know, industry has grown at a low-single digit and first-half was even worse. So this is a phase that we are going through where the players are prioritizing — prioritizing market-share over margins. And I think every industry goes through a phase where people will start prioritizing margins over market-share because beyond the level, market-share will not deliver value. So I think if you take a long-term view, my conviction is that this consolidation and with the fact that large players who are very rational and value-conscious, you know value-creation mind — who have a value-creation mindset are the people — are the people who are investing in this business. And over-time, my personal view is that this industry should deliver very attractive return on capital. We have seen that in the past decade, this industry has delivered a return on capital in the mid-teens. And I personally think that if I take a long-term view at you, that’s my conviction. That’s why we are betting on this industry. My conviction is that the return of capital should be higher in the coming decade than the last decade.
Rahul Gupta
Okay, that’s very helpful. Thank you, Puneet.
Operator
Thank you. The next question comes from the line of Pratik Kumar from Jefferies. Please go-ahead.
Prateek Kumar
Yeah, good morning. My question is on — on pricing ex-incentive. So adjusted for slightly higher incentive on a quarter-on-quarter basis, prices appear higher by around 1.5%, 2% Q-on-Q. How do they stand-on the exit of the last quarter because December has seen meaningful price increase, so which could imply — I mean, and what kind of price increase assume price remains stable in the 4th-quarter? Yeah, as I said this includes roughly about INR14 crores of incentive pertaining to the first-half because in one of the plant, we got this incentive from effect of 1st April. So INR100 crores includes INR14 crores of the previous quarter. And as I said, our guidance for the current year is we expect incentive to be around INR375 crores because quarter-four the volume increases and actually the impact of the incentive also slightly increases. And our reason coming year also, we can expect INR90 to INR100 per ton kind of incentive to be there.
Rahul Gupta
No, my question was around pricing actually. So adjusted for one-off incentive, the price increase Q-on-Q is around 2%, the exit price being higher, what is the kind of implied price for 4th-quarter, assuming they remain stable throughout the quarter?
Dharmender Tuteja
The price would not like to speculate. Of course, efforts will be to increase the prices, but in-line with market, whatever will be there. So we are expecting the constant prices for this forecast.
Rahul Gupta
Okay. And just one question on competitive intensity in South India. So other regions while have seen some price increases, South continues to like sort of struggle on increases. How do you see competitive intensity amid the ramp-up of large peers in the space.
Puneet Dalmia
Look, we expect competitive intensity to absolutely increase in South India. There have been companies which were, you know, underperforming, which have been bought by large companies with strong balance sheet and better management teams, better brands. So I think both Industment, I think we expect a ramp-up in terms of volume to take place and you know there is the demand growth at this point in time is not supporting you know but you know large-volume expansion. So I think there will be heightened competitive intensity in South India without any doubt. And I personally think we have to be prepared for low prices potentially in that market.
Rahul Gupta
So through the FY ’26, because investment is not yet acquired really. So through the FY ’26, the South may remain and sort of worst impacted, which —
Puneet Dalmia
It depends on-demand also. I mean, as I said, they will — we expect that you know companies which have been acquired will their capacity will get ramped-up and depending upon demand, how demand shapes up, you know, prices could be volatile.
Rahul Gupta
Okay. But despite the being —
Operator
Sorry to interrupt you there. If you can please join back the queue.
Rahul Gupta
Sure, thank you.
Operator
Thank you. The next question comes from the line of Shravan Shah from Dolat Capital. Please go-ahead.
Shravan Shah
Yeah, thank you. Sir, just to reconfirm, so to reach a 75 million ton by FY ’28, 25-odd million tonnes. So broadly correct me if I’m wrong, INR16,000 crore to INR18,000 crore kind of a capex we need to do. So just wanted your broader assumption, if you can help us in terms of how much — in terms of the net-debt we can increase because previously we are talking about our net-debt to EBITDA should not cross 2 times, but so that means if you can broadly help in FY ’26, ’27, ’28, how much kind of operating cash-flow are you assuming so that your net-debt to EBITDA will not reach? Or is it possible that there is a chance even if we don’t get the JP back to us, this will further get delayed maybe FY ’29 to reach a 75 million ton?
Dharmender Tuteja
I think we will give you the full roadmap in by July. So please, you know, be patient intense and we will tell you how our balance sheet will also look. We have told you that our broad capital allocation policy will remain the way we have outlined. We are going to stick to that discipline and we will share with you the full detailed plans by July. So please go-ahead.
Shravan Shah
Okay. And sir, is it possible to share any thought in terms of the FY ’26 industry level growth, will it be a 7% close to that? Why I’m asking is that two things, given a kind of a 120 odd million ton plus kind of industry level capacity will be added, how this will — so obviously, the incremental demand is less versus incremental supply. So in terms of the pricing, how this will also impact the pricing going-forward, do you see that there is still a structural chance the cement prices can go up much.
Puneet Dalmia
Can you repeat your question? I didn’t — I didn’t fully get your question. Can you please repeat it shortly?
Shravan Shah
Yeah. Yeah. Two things. What is our expected industry level growth in FY ’26 and given close to 120 odd million ton capacity will be added in FY ’26 and ’27, do you still think that there is a structural chance of cement pricing going up because incremental supply is much, much higher versus incremental demand.
Puneet Dalmia
So look, I think from a — it’s too early to say, but I would just say that you know if the GDP growth picks up, you know we think that the demand growth could be in the range of 6% to 8% next year. And in terms of capacity additions and you know, demand growth not keeping faith and there could be a slight oversupply. I don’t know if your number of 120 million is correct or not. But I think I said in the a few quarters ago that we are going through a phase where you know there are short-term headwinds and the supply growth will exceed demand growth in the short-term. But I think if you look at a slightly longer-term view, always averages out and we think over the five to seven-year period, the capacity utilization of the industry should gradually go up.
Shravan Shah
Okay. Okay. Okay. Got it. And currently —
Puneet Dalmia
In the broader framework, we are seeing that larger companies will outperform the smaller companies than consolidation is continuing to happen. So I think our thesis remain the same you know.
Shravan Shah
Yeah, yeah, because, because that’s the main thing, because if we keep on adding the 25 million ton by FY ’28 and if we are not able to see the kind of a support from the cement prices, then in terms of the ROCE, which we were looking at to further improve, obviously, longer-term a possibility is that, but at least in next two to three years, don’t we see that it will be — it will be on the lower side?
Puneet Dalmia
Well, again, as I said, I mean, these investments are not — whatever investments we choose to make in whatever regions they are not made with a two to three year time-frame, we have to take a slightly longer-term view. There will be some investments in newer regions as consistent with our Pananda strategy, there could be some investments in our existing regions or you know, to get a correct diversified footprint. So I think you know, again, when investments you know are made, we look at a long-term ROCE through-the-cycle and I personally believe and I have this conviction that the ROC that this sector is likely to deliver in the next decade because of all the consolidation and the fact that India will offer you know long-term structural demand growth with multiple drivers like infrastructure, housing, manufacturing and private capex, I personally think that the ROC that this sector will deliver over the long-term in this decade will be higher than the last decade. That’s the conviction that we have and that’s the strategy that we will pursue.
Shravan Shah
Okay. Thank you, sir. Thank you and all the best.
Operator
Thank you. The next question comes from the line of Joti Gupta from Nirmal Bang Securities Private Limited. Please go-ahead. Joti, if you can please unmute from your end and proceed with your question.
Jyoti Gupta
Yeah, hi, good morning. I have two questions. One is, I understand that the East has not grown and while you have a larger market-share in the East, somewhere we’ve seen something like a 4% to 5% growth in the East in 3rd-quarter. However, you still see a decline in your overall volumes. So one, should we — how do you think the 4th-quarter panning out for you specifically as you say the volumes are not impacted and will not be impacted because of this coal incident, but how do you see the 4th-quarter panning out here? And second thing is, even with the decline in volumes, I don’t see a hit from the fixed-cost absorption side. So what has really changed on the fixed-cost side? I mean your other expenses, which has seen a decline of 6%. Could you please explain me that?
Dharmender Tuteja
On the fixed-cost side, we have been, of course, taking care of that expenses remain controlled. So that is one of the reason. And of course, the number of shutdowns, which are higher in Q2 have reduced in Q3. So that is also partly to explain that the this cost is under check. And of course, for the Q4 —
Jyoti Gupta
Has actually come down. I would want to understand what kind of expenses have you actually anticipated which have — you have actually cut on the 3rd-quarter. Any details could you just provide us?
Dharmender Tuteja
The hiring is also not a check. We are not increasing the hiring, marketing costs are also being seen in-line with what it can lead-in terms of productivity. The ATL expenses are being reviewed and being expensed there, we got the highest productivity. And of course, the stores and spare consumption in the plants and all these expenses also are being kept under severe check that the costs are cut to the various menu.
Jyoti Gupta
Okay. And how do you see 4th-quarter, how has been the first 15 days for you and —
Dharmender Tuteja
The quarterly guidance will not give, but as we said that the market will see increase of about, I think 6%, 7% at least and we should be growing much faster than that from the current quarter.
Jyoti Gupta
So — but then we have not grown in the 3rd-quarter because East region while it has been still positive at a single-digit, maybe a low-mid single-digit, we have actually given a negative Y-o-Y growth. So how confident are you
Dharmender Tuteja
Said that see quarter-to-quarter if quarter-to-quarter, it’s very difficult to measure all these parameters on a consistent basis, but in a directional sense, this growth will be seen.
Jyoti Gupta
Thank you, sir. Thank you, sir. That will be all from my side. Thanks a lot.
Operator
Thank you. Thank you. Ladies and gentlemen, we take the last question from the line of Naveen Rameshwar Sahadev from ICICI Securities. Please go-ahead.
Naveen Sahadev
Yeah. Thank you for the opportunity and one last question indeed. On realization. So just requesting more color here because the reported realizations are broadly 3% up quarter-on-quarter. Previous quarter incentive was around INR61 crores. This quarter is INR102. So if I adjust for this INR40 crore incremental and volumes being flat, realization is up around 1.5% or 1.7% quarter-on-quarter. So my question, sir, is if you can just give broad breakup or throw some light as to was it driven by trade or non-trade did the better of it to help this increase directionally, was it south or East? And last bit is if the current — how are the current realizations versus the average of the previous quarter? That would be all. Thank you so much.
Dharmender Tuteja
So even if you take-out this incentive increase which happened because of the first-half INR14 crores being booked in this quarter, we remove that, our growth in the NSR is in-line with the price improvement which we saw in the quarter because of the December price increases. So we expect that the December prices which have increased, I think should sustain in the current quarter also.
Naveen Sahadev
And just last bit, current realizations as we speak or how could they be because the December, the price increase was in December —
Dharmender Tuteja
Again, these are in-line with the December number?
Naveen Sahadev
Okay. Thank you so much.
Puneet Dalmia
Thank you.
Operator
Thank you. Ladies and gentlemen, we have concluded the question-and-answer session. I now hand the conference over to Mr Puneet Dalmia for his closing comments.
Puneet Dalmia
Thank you very much. I just want to say one thing at least over the last two decades when I have been in this business, I have seen many ups and downs and I have learned only one thing that when things are going great, you should not get too arrogant and when things are going a little down, you should not get too disappointed. This is an industry where you have to keep your head-down, your conviction strong and keep executing while blocking out noises. So I think our strategy continues to remain in-line with our conviction that India will offer high-volume growth. This industry will consolidate and this industry will deliver good ROCs in the coming decade. So I think we want to just keep our head-down and execute on that and we again thank you all for your interest in us. Thank you very much.
Operator
Thank you. On behalf of Dalmia Bharat Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.