Nuvoco Vistas Corporation Ltd (NSE: NUVOCO) Q3 2025 Earnings Call dated Jan. 22, 2025
Corporate Participants:
Madhumita Basu — Chief Investor Relations
Jayakumar Krishnaswamy — Managing Director
Analysts:
Navin Rameshwar Sahadeo — Analyst
Jashandeep — Analyst
Satyadeep Jain — Analyst
Shravan Shah — Analyst
Prateek Kumar — Analyst
Kunal Shah — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Q3 FY ’25 Earnings Conference Call of Nuvoco Vistas Corporation Limited. We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statement on the basis of any subsequent development, information or events or otherwise. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Madhumita Basu, Chief Investor Relations. Thank you and over to you.
Madhumita Basu — Chief Investor Relations
Thank you,. Good afternoon, everyone, and thank you for joining our 3rd-quarter fiscal 2025 conference call. Let me start by briefly discussing the broader macroeconomic landscape linked to cement demand, followed by a review of our performance and the key events for the quarter. As you were aware that during first-half of the fiscal year, macroeconomic environment remained challenging and India’s growth rate turned out to be much lower-than-anticipated due to deceleration in industrial growth and capex. However, high-frequency indicators available so-far suggest that the slowdown in domestic economic activity bottomed-out in Q2 FY ’25 and as sales recovered gradually, aided by festive demand and pickup in rural activities. A record Kharif harvest and increased rugi sowing have contributed to a reasonable performance in agriculture and activities, leading to an improvement in the rural economy’s fortunes. Meanwhile, India continues to be the fastest-growing major economy. Although GDP growth has moderated to 6.4% for FY ’25, primarily due to lower capex by center and states in the first-half of the fiscal. The real GDP growth for Q1 FY ’26 is projected at 6.9% and Q2 FY ’26 is projected at 7.3%. The union budget for FY ’26, scheduled to be presented in February is expected to prioritize infrastructure development. Economic experts project a 30% increase in the infrastructure allocation, reinforcing the sector’s critical role in driving economic growth. All this augurs well for cement demand going-forward. Moving on, let me first spend some time on the key milestones that the company achieved in the recent period. Friends, we became a successful resolution applicant for Cement Limited, which is undergoing a corporate insolvency resolution process and accordingly, letter of intent has been issued. Filing with NCLT has been done and approval to the company’s resolution plan is expected within eight to nine months. Asset-wise, Cement has a 3.5 million tons per annum clinker unit in Kaj and a 6 million tons per annum grinding unit in Sur, both equip with equipments from top-quality manufacturers. Production from the facility is targeted to start from Q3 FY ’27. The acquisition offers a valuable buy and sizable growth opportunity being available at a highly competitive cost of approximately US dollar 60 per ton compared to the recently reported acquisition costs in the industry. By acquiring Cement, the company is poised to reach 31 million tonnes per annum cement capacity by Q3 FY ’27 with 19 million tonnes per annum in east and 6 million tons of 6 million tons per annum each in north and West. Net-net, this investment follows the company’s drive for growth and diversification. With this strategic acquisition, Nuvoco Vista is set to expand and consolidate its footprint in the western region of the country, becoming the third-largest player by capacity across the combined geographies of Gujarat and Maharashtra. Additionally, by serving the Western markets from cement, the company would also release much-needed capacity to meet the growing demand of the Northern markets from its Rajasthan plants, thereby strengthening its competitive position across both regions. The acquisition will unlock significant synergies with the Rajasthan plant, enabling seamless operations in existing markets, optimizing logistics and enhancing our overall competitiveness. To reiterate, in-line with our future expansion strategy outlined in earlier calls, the Patraj acquisition meets the timeline of Q3 FY ’27 and will be achieved at a significantly lower-cost, reinforcing our commitment to strategic growth. Let’s now focus on our quarterly performance, reviewing our progress and discussing our outlook for the future. In Q3 FY ’25, the company recorded revenue and EBITDA of INR2,409 crores and INR258 crores, respectively. Allow me to take a moment to highlight the key factors that contribute to these headline figures. Firstly, let me touch upon the volume growth of 16% Y-o-Y to 4.7 million tonnes in Q3 FY ’25. Following the challenging conditions in H1 FY ’25, demand conditions showed improvement in Q3 FY ’25. In response, the company undertook several initiatives to drive strong volume growth during the quarter. However, cement prices in our key markets plummeted in the months of October and November and remained subdued for the major part of the quarter. Price improvement was observed only towards mid-December. Consequently, our realization was impacted during this period. The positive news is that price improvement has been absorbed in the market. We remain optimistic that sustained demand recovery will continue to support prices moving forward. I’d now like to give an overview of the quarter’s performance, specifically focusing on key cement cost elements. Power and fuel cost per ton reduced by 6% quarter-on-quarter. The company has reached the lowest blended fuel cost in the last 13 quarters at INR1.45 per million ton. I would like to emphasize that power and fuel cost continues to be amongst the lowest in the industry. On the raw-material side, continues to be better placed due to its long-term slack supply agreement. Distribution cost per ton declined by 3% quarter-on-quarter due to efficiency in operations. On cost-efficiency program, Project Bridge 2.0 is on-track, delivering a reduction upwards of INR50 per ton YTD. Turning to our balance sheet. Net-debt as of December 31 December 2024 stood at INR4,350 crores, reflecting a year-on-year reduction of INR183 crores. This demonstrates our consistent efforts towards effective debt management. On a quarter-on-quarter basis, net-debt further declined by INR151 crores, mainly driven by release of working capital. The company stays on course with its objective to bring net-debt below INR4,000 crores to support our future investment. Cement demand, the cement industry has witnessed a recovery following a challenging first-half of fiscal ’25. After grappling with subdued demand, the industry is showing signs of improvement driven by improved market dynamics. Going-forward, we believe a key driver to watch out for would be pickup in unspent capital expenditure at both center and state-level. As of November 2024, the center has INR5.97 lakh crore in pending capex, while states have INR5.34 lakh crores capex spending to be executed. Region in Eastern states, including states of West Bengal, Bihar,, and Orista, pending states capex on an average is upwards of 65%. This implies significant potential for increased infrastructure activity in the coming months and thereby acting as a catalyst for cement demand. Additionally, rural housing demand is poised for growth supported by a healthy monsoon. Improved agricultural income and favorable rural economic conditions are expected to drive construction activities further boosting the industry’s outlook. With respect to our ready-mix and MBM business, focus on innovation continues. In ready-mix business, Concrete Concrete launched in FY ’25 and gaining traction across different markets. The MBM business introduced three new products, Tyler SFT5, Tyle Glitter and the Tyle Bonder under the brand Zero F to strengthen the product portfolio. Additionally, tiled adhesive construction chemicals and cover blocks continue to witness improvement in sales. On the sustainability front, our commitment to sustainability is a fundamental part of our operations, reflected in our leadership in low-carbon emission. The audited emission rate for FY ’24 stands at 457 kg CO2 per tonne of materially, which is amongst the lowest in the industry. We believe our ongoing sustainability efforts will consistently deliver value to all our stakeholders, including the communities we impact. With this, I conclude my opening remarks. I’m joined here by Mr Jaikumar, Managing Director, Vistas; and Mr Manish Agarwal, Chief Financial Officer of the company. We are here together to answer your questions. Thank you should we begin the question-and-answer session?
Questions and Answers:
Operator
Ladies and gentlemen, we will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of Naveen Rameshwal from ICICI Securities. Please go-ahead.
Navin Rameshwar Sahadeo
Yeah. Good evening, sir, and thank you for the opportunity. Sir, my first question was with respect to cement. So if you can just help us understand that you said it’s going to take about — I mean, in the initial comments, Madam did mention that it will take about eight to nine months for the deal to get consummated. So if you can just help us understand how much — once the approval is received, what is the bullet payment that will be due to the process or to the bank’s consortium of banks in general and thereafter, how do we plan to spend the balance payment? As I understand you’re mentioning the acquisition at about $60. So roughly give or take, it’s more close to INR3,000 crores or so. So if you can just help us understand that part, please. Thank you.
Jayakumar Krishnaswamy
Okay, thank you very much for this question. As you would all know, Guard Cement is based in Gujarat. They have a clinker unit in Kach for 3.5 million tons of clinker and they are grinding on it in Sudat for 6 million tons. Both these plants were operational when they were shut five, six years ago and then on they have been in condition and finally it came through the insolvency IBC route and we successfully bid for it. And as mentioned earlier by, we have got LOI in the month of January. So the bid amount was for INR1,800 crores and the papers have been sent to NCLT now subject to the approval of the honorable court, which should take eight, nine months. The payment will happen subsequent to that. And then on based on the due-diligence and the various assessments we have carried out in the two sites, we have a range of spend from INR900 crores to INR1,200 crores. So which would be the money needed over a period of 18 to 24 months-to make the assets fully operational. However, we target to operationalize one-well initially and then the clinker line and then the capex would be for a period of 18 to 24 months. So we’re looking at INR1,800 crores of payment post the court approval and then on another INR900 crores to INR100 crores over a period of the next 18 to 24 months. So that’s by around quarter three this year, that’s when the subject approval of court, that’s where the payment will happen that thank you.
Navin Rameshwar Sahadeo
And sir, my second question then was about how confident are we of the balance payment, as you said, initial payment is INR1,800 crores, which is a bid amount, but INR900 crores to INR1,200 crore. So just wanted to get a sense that have we got what do you say, some sort of a assurance or guarantee from the initial equipment manufacturers because you would appreciate that this plant was not operational for quite some time. So of course, you would have looked into it, but my only simple question is, if there is a guarantee some sort of with the original equipment supplier that it will not exceed this range of INR900 crore to INR1,200 crores. Thank you so much. Thank you.
Jayakumar Krishnaswamy
Obviously, when we bid for it, so we have done our homework and that’s how we kind of participated in this NPL bidding process. So we have a fairly elaborate and detailed assessment of both the sites. So we have personally visited the site along with the OEMs. As you would know, the lines are all best European missions. You have an FLS line and a loshe mill and Siemens Electrical and rest of all the stuff office. As per the best OEM, almost all cement companies have this kind of technology, just that these assets have been adding for many years. So they kind of have the where and there and not have been operating. So that’s the X name. But other than that, in terms of assurances from the OEMs and the technical assessment guys, we were pretty — we were pretty confident of our ability to restart the plant in the timelines which we had in mind. And hence, we participated in the bidder. That’s how we offered and bidded at this level of INR1800 crores to acquire the set.
Navin Rameshwar Sahadeo
I appreciate. And just one last question, if I may slip in, please. Does this amount, this INR900 crores to INR1,200 crore also include the captive power plant cost as well because I believe 50 megawatt of power plant is there, but currently it is in under the JSW Group. So does this cost factor-in that cost as well? And are we planning to put in a wasted recovery? Thank you. That’s it from my side. Thanks.
Jayakumar Krishnaswamy
Yeah. The CPP cost at Kutch is not Kutch, the Vadraj is not part of the deal. So we are currently working on to work-out what are the modalities of it. So it’s not part of this INR1,800 crore-plus INR900 crore to INR200 crores. It will be about this. The will cost us more than this.
Navin Rameshwar Sahadeo
And waste-heat recovery is something that we’ll contemplate later — at the later period.
Jayakumar Krishnaswamy
I’m sorry.
Navin Rameshwar Sahadeo
I’m saying, sir, are we planning to do a incorporate a waste-heat recovery plant as well given the kin size or not required since the grinding unit is too far.
Jayakumar Krishnaswamy
We will do, but it will be on Phase-2 and not the day we start the line. However, that INR1,200 crores does include the cost of WHR.
Navin Rameshwar Sahadeo
Oh, great. That’s what I wanted to. Thank you so much, sir. Thank you.
Operator
Thank you. Next question is from the line of Jashin Deep from Nomura. Please go-ahead.
Jashandeep
Hello. Yeah, hi. Thank you for the opportunity. Sir, my first question is on volume. I mean, you have reported strong volume growth. Just wanted to understand from the East market side, so how has the market performed this quarter and how are you looking at the 4th-quarter in FY ’26 in terms of volume? And adding to that also, sir, how is the volume mix between East and North? And have you seen more of non-trade this quarter? Just want some clarity on that, sir.
Jayakumar Krishnaswamy
Yeah, as mentioned after the Q2 and with the ending of monsoon as well as festive season, demand, demand did pick-up in both the markets of East and North and we did fairly well, double-digit growth in both the markets in both North and East and we certainly grew ahead of market in both the places. Our trade volumes certainly picked-up and one of the reason is also the base effect. But in general, we are able to get our volumes in Orissa,, Rajasthan, Western MP. These were the markets where we did quite well. We had a broad-based growth both in trade and non-trade. And certainly, we maintained our value strategy. Our premium product percentage continued to be at 39% and that’s very — that’s the focus always. I have mentioned in the call that we will never run behind volume compromising on value. We did get our premium product number of 39% as well as the volume in both the markets. And as mentioned, the only wet blank that in this quarter was prices kind of went to probably three years low in East as well as north and that had a significant impact in the realization bid. But the first I always look at is around middle of December, I think we took price risis in both the markets as well as east and north and certainly things looked up for us end-of-quarter. Since question on this will come later, I just want to inform you as well that the December end realization was 6% of the quarter realization. So we ended the quarter very strong. And as we enter January with this backdrop of volume growth with the backdrop of focus on premiumization and also overall improvement in realization, I think we are on a very strong wicket as we enter quarter-four.
Jashandeep
Okay. Thank you for such nice.
Madhumita Basu
Additional data point,, to answer your question, our trade percentage share remained at 71% both Q2 and Q3.
Jashandeep
Okay. Thank you for that, ma’am. Just touching upon realization before I ask my second question, sir, your blended realization seems to have dropped around 5% quarter-on-quarter, which is slightly more than what we saw during our channel checks. Just wanted to understand, is there a drop-in RMX — RMC realizations also or if you can just give me how much your cement realizations have declined quarter-on-quarter, that would be great.
Jayakumar Krishnaswamy
Cement realizations dropped Q-o-Q by 3.6%. But as I mentioned, we ended the quarter with December exit realization of 6% over the quarter average. So I guess the reported number in-quarter end December is 6%. So we have kind of overcome the realization drop of 3.6% on-top of it, we have grown. So I think we entered January on a strong with a good momentum behind us in terms of volume, focus on rate premium or so that’s way we’re looking. Q4, you’re very well pleased.
Jashandeep
Right, thank you. And just last question on this, sir. I mean, in about six months, we might be seeing INR1,800 crore cash outflow, then another INR1,200 crore cash outflow. So how do we see net-debt or how should the market look at your net-debt? How will that trajectory go? Are you looking to take more borrowings are expected to increase. I mean, if you can just give you clarity on how your net-debt will be, let’s say, by the end of FY ’26, just a trajectory-wise that would be great.
Jayakumar Krishnaswamy
Yeah, I will answer it in a little bit of a detailed one so that I think almost all aspects get covered. In all our calls in the last few years, we have maintained that we would be comfortable having a debt level of INR3,500 crores to INR4,000 crores. And around that time is when you will kickstart the next growth plans for the company. And even in the last investors call, I had answered a question from one of the analysts where I had mentioned that we will start-up the next expansion for the company either in Q1 or Q2 of FY ’26. So that’s the position we had three months ago, six months ago. And one of the principal endeavors for the company was to pay-down the debt from the IPO times till now and very happy to report that from December ’21, as since mentioned in the investors debt, you would have seen in the presentation, our December ’21 debt level of the company was INR5495 crores and comparable December ’22, December ’23, December ’24, this number has moved from 5495 to 5165 to 4533 to 4350. Every quarter comparable quarter for every quarter-ending, we have been pairing the debt all-the-time. And the way — the trajectory certainly gives us confidence that by the time we finish this year, we would be 4,000 and thereabouts will be the debt level and that’s our committed number to make the next investment. That is the backdrop of either through or through own growth in brownfield expansion. That is how we never envised three months ago, six months ago. But certainly, we are very clear that will start this expansion plan moment we hit our internal target of INR3,500 crores to INR4,000 crores of debt level. And in-between happened and then we did a cost-benefit analysis of the value buy of as well as investment, we found the thing very economically attractive for us and hence we went for it and then successfully bid for it. And the benefits of our, very well explained that it gives us a growth opportunity in North where I even have — I will release capacity and go participate in North — more aggressively going-forward, plus it gives an opportunity for me to go in the West. Six in North, six in West, 19 in, overall 31 consolidate to be — continue to be the 5th-largest player. The question you asked about how do we kind of fund this deal. So here, we are currently in the process of working out the modalities. Suffice to say, we are mindful of the debt levels in our balance sheet. And I just want to assure the share investors that as we do the financing for this deal, which will take minimum six to eight months since NCLT itself going to take that much amount of time, we are mindful of the debt and will ensure that all the covenant conditions of NBCL are always met.
Jashandeep
Sure. Thank you so much for such a detailed answer, sir. I’ll join back the queue. Thank you,. Thank you.
Operator
Thank you. Next question is from the line of Satidep Jain from Ambit Capital. Please go-ahead.
Satyadeep Jain
Hi, thank you. I had a few questions on Budraj and then one on the quarter. So, Kumar, on, just wanted to understand from capital allocation perspective, you — the company has INR4,000-odd crores of net-debt sitting outside, we would imagine that between brownfield expansion in North and this downfield would be — given the situation, given the debt on the balance sheet, the less risky option would be a brownfield expansion in area you already know, the asset you already know. This one is an asset which is unknown in a way to you, the entire sea logistics, operating Jetty, a very different model with — which carries going into an unknown territory to some extent. So how do you — just wanted to understand from capital allocation when you’re looking at this investment and you’re evaluating at this stage why now and just not the acquisition itself, but at the stage where you are, why this made more sense versus brownfield expansion? Let’s the first questions.
Jayakumar Krishnaswamy
Yeah, let me just take that question,. First of all, I guess we have been in the industry for many years and then certainly we have the requisite knowledge to start a plant, put up a plant, expand a plant anywhere in the country. So I guess we’ve got good set of people, good team so that the confidence arises from the fact that we have a wonderful bunch of people who will be able to do it. But having said this, certainly, as you mentioned that there is always this Jet element, which we don’t have experienced plus also it is going into a new territory. Let me address the first question of new territory. Already we sell close to million tonnes in Gujarat. So expanding from 1 million to 2 million and above in a span of a year and a half will certainly happen. But this capacity of 6 million is not going to be consumed in one or two years. It will get take probably three to four years for us to consume this capacity. And as we ramp-up the capacity from this asset, the and the facility, which we currently use to feed Gujarat will get reused in Rajasthan, Haryana and beyond and also with the Biwani grinding unit, we are very nicely placed to go up north to grow in that side of the country. Coming to the Jetty bit, yes, I acknowledge the fact that we currently don’t have experience in Jetty operations, but we are mindful of the fact we will bring onboard the experts who know-how to operate a JT and manage JT and they will come on-board pretty early in the journey. And so that by the time we start this expansion work, we would have a wonderful team of expert Jetty operators who will be on-board and that’s how we plan to address this issue.
Satyadeep Jain
Wanted to ask or follow-up on this Jetty situation. If I look at the only two players I can think of and maybe you can correct me if I’m wrong, is when we acquired, when they acquired the Seva Gram, they are already operating in that area and then largely Ambuja. But barring that, I’m not too sure of too many players being successful. Many players have tried this entire coastal movement and nobody I can think of has been successful. Maybe just wanted to understand when you evaluated different case studies and how they played out, what do you think went wrong for some of the players and where do you think you can replicate what Ultra Tech and Ambuja have been able to do and maybe others have not been able to do? Why do you think you can give you confidence that you can do what these two guys have done?
Jayakumar Krishnaswamy
Okay. Quick one,, obviously, we have done our internal homework, obviously, we have not take all the boxes and we have gone. Suffice to say that with the knowledge which we have and the expertise we planted — we acquired in the organization, we will be able to address this. That’s the first point I want to make. And in terms of the people who have been successful in that region and obviously, we’ve got the place where we operate, there are a couple of other neighbors and in fact, the topography of the place in such a way that the ocean depth and the estuary mouth and all are going to be shared between us and the other two players. But then you come to this and then you come to gay area and area and you go to area, then you’ve got three, four more cement companies who got clinker as well as cement movement, people have tried, some of them have been successful, some of them have not been successful. So being and we are running a company and we are pretty optimistic that we will be able to learn and operate. We’ve got time. It’s not like tomorrow morning I need to operate the JT. I starting now, NCLT takes few months from now six to eight months and then another 12-odd months for the plant to come. We’ve got time from now till end of next year. So that’s where we plan to build capability in the organization to try it out being — build what we call bring in refuted people to make this work. In terms of lessons learned, too early for me in this call to tell you what are all the potential lessons. But I promise you that in a quarter from now, two quarters from now, once we gain knowledge, I will be able to share with you our plan and then at that time, I would be much more competent to answer your queries.
Satyadeep Jain
Okay. Thank you. Just one clarification on this. Is it a fair weather port or a full — all-weather report?
Jayakumar Krishnaswamy
No, it is a fair the Board. Certainly in the months of — pre-monsoon months of May, June, July. So normal recommendation is cannot move. So it’s factored in our plan. So we would either — there is adequate space in the Surat facility to store. We’ve done some calculation. Technically, we need to store about 2 lakh tons of clinker we plan to have capacity to store that kind of clinker to manage the pre-monsoon area. Otherwise, I guess we will take an external space. Some handling costs will increase for those three months, but certainly that is factored in the overall plans for the company.
Satyadeep Jain
Okay. Just one quick question, last question, if I can squeeze on this quarter. Historically, we understood the company was avoiding certain markets where pricing was lower, maybe, if I’m not mistaken, maybe Bengal, I don’t recall. And the idea was quality over quantity. And this quarter it seems to be — do we assume that maybe some markets when had historically vacated is entering? There’s also a change in sales team recently. So just wanted to understand, is there a change in strategy there of chasing quantity volume over pricing and looking at the numbers, it looks like. I just wanted to check if that is wrong or wrong assumption.
Jayakumar Krishnaswamy
No, I guess it’s a fair question for you because you’re observing a 16% volume growth and I guess you have — you will have this in mind, how did we — did we change your strategy. I just want to assure you that we were always committed to premium products. We pride on our ability to sell premium products in the country. I think that’s the DNA of the company and I don’t think we will move away from the basic DNA of the organization. Even in this quarter, we have not grown. That is why with this 16% volume growth as well, our premium product continued to be 39%. So obviously, we grew more in premium products also in absolute volume terms. So there, there is no-compromise. But certainly in the previous calls, you would have heard that in Bengal and markets, I think the demand was pretty tepid in the past quarters. I think that opened up a bit and we sold more in Bengal. We did sell more in., I guess it’s a home market for us. So I won’t say there’s a strategy shift for us in, but I think one of the priority areas I have kept for my company is we have three factories with branding facilities and we are equal to anybody else — any of our competitors in that market. Certainly, we would like to play aggressive not as in dropping price, but using the proper resources because the contribution margins are highest in that market. So we ran a program called Vijay and as an internal program which we deployed, looked into markets which not participate and hence we participated. Even in, our microfiber is a premium product, even microfiber target for actual achievement for the quarter was well into double-digits. So I think there again we made good inroads. So in, we participated with. In Bihar, we participated with launching Contito Uno in Bihar, Bengal and. So you will see us coming up with top-end products, which will be higher than the highest priced product in the market to maintain our premium position.
Satyadeep Jain
Okay. Thank you so much. I wish you all the best. Thank you.
Operator
Thank you. Next question is from the line of Shravan Shah from Dolat Capital. Please go-ahead.
Shravan Shah
Hi, thank you. Most of a bigger questions has been answered. Couple of data points. Lay distance for 3rd-quarter, road rail mix and possible fuel mix, if you can say.
Jayakumar Krishnaswamy
I will be able to give you our quarter three FY ’25, our lead distance is 327 kilometers vis-a-vis Q2 number of 33 kilometers reduction in lead distance. Our road share increased from 60 to 64. I mentioned that we focus more on such a road opportunities did increase. Rail share reduced from 40% to 36% that. So it’s it is 64% road share, 36% rail share, 327 lead distance. In terms of fuel mix, as mentioned in earlier part of the call, our rupees per million cals of Q3 stood at 1.45, lowest in the last 10, 11 quarters, 13 quarters and out of which linkage core 1.32, non-linkage core 1.3 imported core little bit we used to pet coke at 1.66, AFR was at 1.04. Percentage-wise, if you want to know, our core was 42, 48% and AFR deficit.
Shravan Shah
Sorry, AFR was how much?
Jayakumar Krishnaswamy
10%. Q2 was 8%, Q3 10%.
Shravan Shah
Okay. Okay. Got it.
Jayakumar Krishnaswamy
And three of last year, but we were improving in Q4, you’ll see much more AFR in Q4.
Shravan Shah
Okay, okay. And in terms of — sir, from here on the project bridge, last-time we were saying that we are looking at a 75-odd kind of a cost-reduction in second-half of this year FY ’25. So now how much one can look at in this Q4, how much more is left? And going-forward in FY ’26, ’27, how one can look at in terms of the cost-reduction.
Jayakumar Krishnaswamy
So in terms of actual rupees, which we will clock in Q4, I can be — at nine months, we are at 54. I guess with the increase in volumes expected in Q4 and all the programs coming to fruition, this number can certainly go up another 15 INR20. So that’s the number we will have in Q4. Our Q4 number could be about INR75, full-year number will be a little bit lower than that because nine months is at INR54. But there are the projects which will certainly continue to next year. The grid integration, power sale as well as increase in AFR of key programs. Sonati railway siding is completed. So we used to do about three rigs per day movement of clicker. Recently, we have moved from two, three to four rigs and our target is to move five rates, which would mean that no more of road movement of clinker from Sonati, everything will be a rate movement. Jaspur siding is advanced-stage of completion. So I think the last about 100 meters of track needs to be laid. So it should be ready in the next six to eight weeks. Come Q1 FY ’26, Jaspur should be on and the last movement of clinker by moving from, sorry, from the, which is close to into the plant setting will happen and also cement movement from Jazpur into South will also happen through rate. So those savings will happen from Q1 next year.
Shravan Shah
Okay. And then in terms of the capex in nine months, how much we have done and what is left in the 4th-quarter
Jayakumar Krishnaswamy
YTD CapEx this year has been INR299 crores and I guess in Q4 we are looking at this and little bit of sustaining capex, which should be close to the tune of another INR50 crore to INR60 crores.
Shravan Shah
Okay. Okay. So broadly, if I look at Vadhraj, INR3,000 odd crore to be spent in ’26 and ’27 and plus, I think INR300-odd crore kind of a maintenance every year. So INR600 odd crores. So INR3,600 crore kind of a capex one can look at in FY ’26 and ’27, is it a fair assumption to look at? And also if possible, can we see what kind of a volume in the Q3 FY ’27 or Q4 FY ’27 from
Jayakumar Krishnaswamy
That will be very difficult for to answer in this call, but I’m looking at a ramp-up if I’ll just give you a number which I working on. Q3 FY ’27 is when we are going to be ready with the plant. So I’ll get 1/4 of FY ’27 and then ’28 and ’29, I’m looking at a very optimistic 1 million coming out of Adraj in FY ’27 and then on it goes to 2 million in ’28 million and 3 million in ’29 million. So the spend of the company will increase because the capacity which gets released from will be sold-in north of India.
Shravan Shah
Got it. Got it. Understood. Understood, sir. Thank you. Thank you and all the best, sir. Thank you. Thank you.
Operator
Thank you. Next question is from the line of Naveen Sahade from ICICI Securities. Please go-ahead. MR. Naveen sir they?
Navin Rameshwar Sahadeo
Yeah, yeah. I was on-mute. Sorry. Yeah. So thank you. Thank you for the opportunity. So in the previous question, sir, you did mention about plans for volume ramp-up, which is a 1 million ton — 1 million and 3 million ton in FY ’28, 2930. Is that what you just mentioned, correct?
Jayakumar Krishnaswamy
1 million 27 28 1 million and then 291 million will come out of it, but then that’s — that’s far as looking currently right now. But if you look at our company, I’m really look at the kind of volumes we did last year at 18.7 million and then with the kind of Q3 numbers and overall forecasting for this year, if I hit an indicative number and give plus-minus 0.1, 0.2, we should always keep. I’m looking at a 10% growth year-on-year from next year, we should have all the way to ’21, ’23, ’25, ’27. That’s the kind of 2 million increase in sales the target I’m keeping for us is going-forward for the next three to four years.
Navin Rameshwar Sahadeo
Correct, correct. But just from a capacity utilization point-of-view, I’m talking about specifically Vadraj here. So if the clinker is 3.5, it is only a fair weather port, which means 1/4 the impact — the operations could be impacted. The region is both Gujarat and Maharashtra are non-trade dominated. So if I, let’s say, broadly assume a 50-50 mix between OPC and PPC in that market for a 75% clinker utilization, the max what we can extract from this 6 million ton capacity is about 3.5 million tonne at its peak.
Jayakumar Krishnaswamy
That’s — that’s the way you’re looking at the calculation. I will tell you the way I am looking at the calculation. We are looking at the calculation. First of all, if it’s a, what do you call fair weather port, certainly, I think we will stock clinker, that’s how all industries work even in East for shutdown and rest of the moment, I always keep clinker stock in Q2 and Q3 so that when Q4 comes, cement industry is also somewhat seasonal. And then certainly, I think every — every player in the cement industry has the ability to stop and use clinker. We will also stock and use clinker. So certainly, before the onset of this fair weather period, we will plan in such a way that the clinker moment during — not moment of clinker during those months will not impact our cement production. That’s the first thing. There will be some impact. I cannot say everything is going to be dory in real-life. There will always be some gap. So that’s the first thing on clinker will not kind of spoil be a spoil for me. The second thing that comes is you mentioned about 50-50 OPC and PPC market. I am looking at Gujarat market that 66% what do you call what they call 40% PPCN, 60% OPC. In fact, even conservative than you have taken — you have taken 50-50, I’ve taken-up my business model looks at 60-40 and trade to non-trade ratio is also about 65-35 is what the 46 is what I’ve taken. With all these numbers, the kind of volume that will come out of 3.5 million tons, ratio of close to about 1.4, 1.5 will take the overall capacity to close to 5 million tons, 5 million to 5.2 million tons. But one thing we are very clear is, at this point of time, it’s 3.5 million tonnes, but our clinker line in factory, when we acquired Imami came with 10,000 TPD, today the line has been debottleneck to take to 12,000 TPD. So I think we are not looking at 12,000 TPD in Bhadraj on day-one, but I think as we grow the market and we understand the market and ramp-up volumes at some stage in FY ’27 and ’28 and the debottlenecking which you’ve done, is not like making huge capex. It because about INR100 odd crore kind of a capex where we kind of change the coolers and the blowers and the RCM of the kill and then in the — what do you call the air circuits and the back filters, that’s how we kind of debottleneck. We will debottleneck this plant is a copy of take the capacity from 10,000 to 12,000 PPD at some stage in the future.
Madhumita Basu
Naveen, we’ll be happy to engage with you on more details on the mix. Just would like to add, our model also factors in the trade market a product like PCC because there is access to slack cement in that market and one of the lead players has already introduced this product. We also see in a period of four to five years, there will be substantial demand from sustainability point-of-view on the entire industry because as you know, in the Eastern region, there isn’t any predominant cost for staying with OPC in infrastructure. So changes are there. Some of these are factored in. And as I mentioned, you may reach-out to the investor cell at any time for greater clarification on these numbers.
Navin Rameshwar Sahadeo
No, thank you so much. I really appreciate the clarity of the operations that you have in mind so early in the scheme of things. So congratulations on that. My last question, is it safe to assume capex of roughly INR2,000 odd crore each in FY ’26 and ’27? Thank you.
Jayakumar Krishnaswamy
FY ’26 and ’27 capex currently INR2,000 crores per annum, not most.
Madhumita Basu
Taking a INR3,600 for both yards, about INR1,800 would be
Jayakumar Krishnaswamy
Either 100 1,800 crore to — sorry, INR1,200 crore to say get the buyout is not capex, so it’s financing of the deal. So that cannot be considered capex. The capex will be about INR1,200 crores here. And as I mentioned in the previous call, there was a question about what will be the — how will we expand our brownfield expansion was the question to me last-time. And I had mentioned that the — there won’t be any major growth capex is in any of our plants in East. It will be the sustaining maintenance capex, which should be to the tune of about — in fact, one of the analysts had asked what should be the typical routine capex for the company? I had mentioned INR300 odd crores will be the kind of routine capex for the company. And hence, with this kind of capex to run the operation and also do a INR1,500 odd INR1,700 odd crores to set-up a — the brownfield, we would be able to fund the capex with the internal cash flows and the profitability improvement in the next two years. That’s how I had answered a question. Same thing holds good, just that the location has changed, the level of spend is slightly more, not from the brownfield expansion was much expensive than this expansion. Funding of this deal, we are working as I mentioned before. So I think that’s the view we have over a period of two, 2.5 years, internal accruals, proper cash flows, improvement in profitability should be able to help us fund these capex programs.
Navin Rameshwar Sahadeo
Great, great. Really appreciate the clarity. Thank you so much. Thank you.
Operator
Thank you. Next question is from the line of Prateek Kumar from Jefferies. Please go-ahead.
Prateek Kumar
Yeah, good evening. My first question is on your cost. So despite like 4% decline in pricing, unit EBITDA has actually slightly expanded quarter-on-quarter, largely implying a very sharp reduction in cost trends for this quarter Q2. Maybe some of it is operating leverage, but there is a nearly like 20050 plus reduction in the variable-cost of the company. I mean, I’m including RM, power and fuel and freight there. So is this like largely due to the cost-saving initiatives, which you said like a much lower number. But is there any one-off there? And do you expect this number to like sort of continue because in past quarters, we have not seen such kind of declines on a quarter basis for the company.
Jayakumar Krishnaswamy
So the principal components of cost-reduction are of threefolds. One is reduction in power cost. The number at power cost is lowest in 13 quarters is 1.45. That contributed to the reduction in the energy cost for the company. The second one was the reduction in logistics cost by close to about INR50, which is comprised of lead distance reduction by 3 kilometers, handling cost-reduction by about INR20 odd and also maximum utilization of the siding. That was the second variable. The third variable-cost reduction was coming from raw-material cost-reduction, which contributed about INR50 odd rupees. So all this certainly contributed to overall variable-cost reduction for the company. But as you asked pertinent point, the price drop, which happened or the realization reduction simply chewed away all the cost-savings which we did. But the positive thing for me is, as we ended December, the realization got reinstated by 6% was quarter average. So what I lost in the first 2.5 months of quarter, I reinstated by end of December which will come Q4.
Madhumita Basu
We have responded to your query.
Prateek Kumar
All right. Yeah. So you’re just saying that like this quarterly savings and cost are like sort of sustainable and next quarter particularly, there will be further benefit of operating leverage. So I mean, based on like, obviously, you’ve talked about 6% price increase, which is like through January. So I mean, like not looking at forecast, but like INR300, INR400 swing in EBITDA per ton like in 4th-quarter by looking at?
Jayakumar Krishnaswamy
I guess I can’t comment on your numbers, but certainly I’m looking at certainly reinstatement of rail station end of December and in January.
Prateek Kumar
Sure, okay. And my other question is on Badraj acquisition. So do you also see — because we have seen like some recent events related to that, but do you also see any chances of this deal while we have like sort of won this acquisition? Any reversal on the whole process and not going through?
Jayakumar Krishnaswamy
Possible because recent issues which happened in others, I guess there are various reasons. So technically, I guess if somebody wants to put a spanner on the work is possible. So I guess — but I don’t think in terms of what do you call the reasons which hampered others issue may not be the reason which will come for us because our due-diligence was pretty exhaustive and then the kind of considerations we made were clear, but certainly, I think I cannot rule out any hiccup which may come on the way?
Prateek Kumar
Sure, I’m asking because for modeling purpose, so we should like sort of look to get more confirmation closer to event by maybe Q2 FY ’26 and then probably want to model it or like how do you think about the same like-kind of a confirmed call like where they are like
Jayakumar Krishnaswamy
Able to — because the NCLT process we have filed only two days ago. I guess typically it should take optimistically six months in the worst-case scenario, maybe eight, nine months. So that’s the kind of window we are working on. But I think, certainly, I think in terms of the modeling and in terms of overall company’s outlook for the next four to five years, I would certainly suggest you to consider the projections which we have factored, but there’s always a factor which I don’t think we cannot control, but that can happen. I don’t think I can comment on that. But certainly one — the other way I would look at is, in any unlikely event of anything happening, our story of expanding through brownfield still holds good and there we are committed to growing the business in.
Prateek Kumar
Yeah, that’s true, but in other case also that was the case, but there was like lot of I would say rather time-based which happened in this whole process of acquisition. So that was the only point I was talking about.
Jayakumar Krishnaswamy
No, you are fairly — you are pretty, I think, right in asking this question. But I think having made all the assumptions and went behind this acquisition and having fructified the deal right now, I think I won’t be in a position to say that whether we will lose out or not, but there is always a business that is associated with stuff. So what you’re mentioning can be a risk, which as a company, which we have gone for it, I will not be able to say that it will happen, it will not happen, but we are confident of overcoming the points but you can consider this if you want to.
Operator
I’m sorry, sir, you’re not audible.
Jayakumar Krishnaswamy
You’re talking about Noku or Prate from your speaking all the way. I don’t know where did I think we got the answer.
Prateek Kumar
I think I’m done with the question. Thank you. Thank you.
Operator
Thank you. Next question is from the line of Kunal Shah from DAM Capital. Please go-ahead.
Kunal Shah
Yeah. Hi, good evening, team. So just a couple of questions. One, you I think briefly mentioned upon this, but is there any discussion with Asla and Surat for slack procurement and could you sort of launch either composite cement or GDPS in Gujarat to sort of create some bit of differentiation?
Jayakumar Krishnaswamy
So there is no — any conversation with anybody at this point of time, just that the history of this asset when it was set-up, whenever it was set-up, factor that they would have some tie-up with the company, which you mentioned for slack and the fact that they are close by and then they generate slack, there’s always a possibility. And no co being a strong player in East with making blended cement have the ability to use slack. This opportunity will always be there, but at this point of time, there is no conversation going on with anybody. But as Meeta mentioned, another player has already launched a composite cement in this market. So we — as we kind of navigate the next few months, we’ll observe this particular trend very, very closely and we will plan our strategy based on this and formulate our plants based on how the market is picking-up this blended cement and if there is an opportunity to procure slack from people who generate the slack.
Kunal Shah
Understood. This is helpful. And the other bit is, you mentioned in your opening remarks, there is a very big shortfall on the government capex, especially until November. But just wanted to understand how is December and January sort of panning out on-the-ground? Are we seeing sort of a robust pickup or it still remains sort of moderate? Thanks.
Jayakumar Krishnaswamy
I think sitting at the beginning of the quarter for me to tell how the market demand, I think it will not be appropriate. But certainly, I can vouch for price ticking to the market because that’s a published number that’s a number which all of us pick-up during trade check. But I’m pretty optimistic that Q4 overall demand should improve for the industry and certainly for our company.
Kunal Shah
Understood. Thanks. This is helpful. All the best.
Operator
Thank you. Ladies and gentlemen, we’ll take that as last question for today. I’d now like to hand the conference over to Ms Madumita Basu for closing comments. Over to you, ma’am.
Madhumita Basu
Thanks again, to wrap-up, I would like to mention a few more. We believe that the cement sector is witnessing a promising demand recovery. A huge unspent capital expenditure from center and state and an expected revival in rural housing demand aided by favorable monsoons provides a catalyst for the cement demand. The price increase observed in the recent period continues to sustain, reflecting a positive trend, while sustained demand improvement should support prices further going ahead. We are confident in our strategy and ability to execute our growth plans with respect to cement, which will enable us to consolidate our footprint in the Western region. We are excited about our prospects for the future. Meanwhile, our strategic priorities will continue to focus on premiumization, optimization, enhancing fuel mix efficiency, strengthening our brand and maintaining focus on cost excellence., I would just like to add that while we are cognizant of business risks, we repeat, we are confident in our approach, strategy and actions we have taken on the front. Our Investor Relations team will remain available for any clarification required. Thank you for being with us today.
Operator
Thank you, members of the management team. On behalf of Nuvoco Vistas Corporation Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines.