Hindalco Industries Limited ($500440)

Ladies and gentlemen, good day, and welcome to the earnings conference call of Hindalco Industries Limited Fourth Quarter Results for FY '26. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference call over to Mr. Subir Sen, Head of Investor Relations at Hindalco. Thank you, and over to you, sir.

Thank you, and a very good morning and evening, everyone. On behalf of Hindalco Industries, I welcome you all to the earnings call for the fourth quarter of financial year 2026. In this call, we will refer to the fourth quarter financial year 2016 investor presentation posted on company's website. Some of the information on this call may be forward-looking in nature. And is covered by the safe harbor language on Slide 2 of the set presentation. In this presentation, we have covered the key highlights of our consolidated performance for the fourth quarter financial year 2016 versus the corresponding period of the period prior year. segment-wise comparative financial analysis of Novelis and Indian aluminum and copper business is also provided. The corresponding segment information of try periods have also been restated accordingly for a comparative analysis. Today, we have with us on this call from Hindalco's management, Mr. Satish Pai, Managing Director; and Mr. Bharat Goenka, Chief Financial Officer. From Novelis management, we have Mr. Steve Fisher, President and CEO and Mr. Dev Ahuja, Chief Financial Officer. Following this presentation, the forum will be open for questions and answers. Post this call, an audio replay will also be available on the company's website. Now let me turn this call to Mr. Pai to take you through company's performance and key highlights in the fourth quarter of financial year 2026.

Yes. Thank you, Subir, and good morning and evening, everyone. On Slide 5 to 10 of this presentation, you can see our achievements and progress across quarterly metrics of safety and sustainability for this quarter versus prior periods. I will now take you through the key highlights of these initiatives. Let me begin with a positive highlight. Hindalco has once again been featured in the S&P Global year book 2026 ranking among the top 1% in S&P Global ESG scores within the aluminum industry. Notably, only 11 Indian companies have achieved this distinction. This recognition reinforces Hindalco's leadership in the aluminum sector and underscores our strong commitment and strategic focus on delivering long-term ESG excellence. At Hindalco, safety is always our highest priority. LTIFR for this year stood at 0.23, showing significant improvement over the prior period. During the year, we sadly report the 3 fatalities at our Indian operations. We deeply regret this loss and remain firmly committed to implementing all necessary corrective actions to prevent such incidents in the future. We have significantly strengthened our safety capabilities by developing 295 safety SMEs enhancing the effectiveness of risk controls over across operations. This has been complemented by over 0.6 million line management-led safety interventions, which have helped sustain ALRP risk environment while reinforcing overall operational safety resilience. In parallel, we are driving real-time experiential learning through the development of safety theme parks across multiple units embedding a culture of proactive and hands-on safety awareness across the organization. We are also implementing measures to prevent man-machine interface risk across all our manufacturing units. At Hindalco, we continue to make strong progress on circularity and responsible waste management. This year, 88% of the total waste generated was recycled or reused indicating stronger waste management performance. We achieved a 131% recycling of bauxite residue excluding nickel, 106% recycling of ash and 126% recycling of copper slick in fiscal 2026. Ash utilization has increased at Aditya, Renesagar and Utkal driven by strong demand from the cement industry as well as upside low-lying area filling. At the same time, bauxite residue recycling has scaled up, supported by growing demand from cement manufacturing, road construction and quarry backfilling applications. In addition, recycling of copper slag has also improved, led by higher uptake from abrasives and ready-mix concrete industries, further strengthening our overall waste-to-value initiatives. We have made consistent progress in improving water efficiency across our operations. In the aluminum business, specific water consumption has steadily declined over the years, driven by a series of focused interventions such as adoption of 0 liquid discharge systems, optimization of cooling tower operations and reuse practices. These initiatives have helped us significantly reduce dependence on freshwater sources while improving overall process efficiency. A similar trend is visible in the copper business as well where freshwater consumption has also reduced over time, supported by better water management practices, recycling measures and operational efficiencies. Together, these efforts underscore our strong commitment to sustainable water stewardship and resource conservation across the value chain. We remain deeply committed to preserving and enhancing our biodiversity in and around our areas of operation. Under our known net loss approach, we planted 1.3 lakh Mangrove sapplings near the age along with 0.2 lakh sapplings at Aditya Aluminum, while total plantations increased to 8.7 lakh across sites versus 5.3 lakhs in FY '25. Through our biodiversity management plan, we have transplanted over 1,600 trees, developed 1.6 hectares of butterfly garden and removed invasive species across 7 excess to restore ecological balance. Additionally, under our red to green initiatives, we have converted -- we are converting legacy sites into green ecosystems, including transforming Mori's tailings dam bond into a 17.4 hectare biopark and undertaking the country's first quarry restoration using over 1 lakh tonnes of bauxite residue. At the end of this year, our renewable energy capacity stands at 470 megawatts powered by solar wind and idled sources. We remain on track to add other 53 megawatts in the coming quarter. At the same time, we are making strong progress in round-the-clock renewable of storage-based power schedule for scheduled for deployment this quarter, taking our total renewable capacity to 523 megawatts by the end of Q1 FY '27. These achievements reflect our unwavering commitment to clean energy and reducing carbon intensity as we move towards greener, more sustainable future. Our aluminum specific GHG footprint for fiscal 2020 stood at 19.2 tonnes of CO2 per tonne of aluminum produced, marking the lowest level achieved. Importantly, this reduction is not a one-off outcome, but a part of a structural and consistent downward trajectory and emissions intensity, underscoring the effectiveness of our decarbonization road map. It reinforces our commitment to building a globally competitive low-carbon aluminum business aligned with evolving customer expectations and long-term sustainability goals. Now let me give you a glimpse of the current broader economic environment on Slide 12. The current economic scenario is shrouded in geopolitical conflict and uncertainty. The IMS reference forecast for 2026 begs the global growth at 3.1% lower than earlier expectations. This slowdown reflects the impact RECONNECT of the conflict invests in the absence of which the outlook would have been stronger. Advanced economies are expected to impact with conflict with growth easing slightly from 1.9% in 2025 and to 1.8% in 2026. In contract, growth in developing economies is projected to slow down from 4.4% to 3.9% in 2026 largely driven by the Middle East run where growth is expected to moderate significantly from 3.6% to 1.9% due to the more direct impact of the conflict. The U.S. is projected to grow at 2.3% in 2026 versus 2.1% a year ago, supported by energy exports fiscal policy and tax initiatives and technology-related investments. China is projected to slow to 4.4% from 5.5%, while policy stimulus and lower U.S. tariffs on Chinese goods are expected to cushion some of the negative impacts of the Middle East conflict. Global growth remains vulnerable to a combination of geopolitical escalation, energy shocks, inflation persistence and financial tightening with risk reinforcing each other. Global inflation is expected to rise in 2026 to 4.4% from 4.1% in 2025 due to higher energy and food prices with strong upside risk in geopolitical disruptions persist. India has entered this crisis with a relatively stable macro performance. The national statistical estimates the FY '26 growth that implying the Q4 FY '26 at 7.3%. The economic momentum from the first half of FY '26 continued into the second half with fiscal measures like GST rationalization and monetary policy easing supporting the economy. Manufacturing activity remains steady and business expectation and leading indicators point towards stability. On the demand side, the urban consumption is steadily improving, while rural demand continues to hold. Sustained performance in the services and agricultural sectors continue to support economic activity. Against this backdrop, the RBI expects a GDP growth of 6.9% in FY '27. However, the risks are tilted to the downside. -- with the growth conditional on further escalation and widespread of conflict, heightened volatility in the global financial markets and weather-related events. Inflation is projected to more than double to 4.6% in FY '27 versus 2.1% in FY '26 with heightened upside risk. Moving to the industry outlook on Slide 15. RECONNECT On Slide 13, you can see that the aluminum prices have continued to strengthen during the quarter, supported by steady demand across key end use sagas packaging, electrical, machinery and transportation. On the supply side, the conflict in West Asia, which has led to one of the most significant supplied disruptions in the aluminum market. This is expected to tighten availability, particularly through Q2 and Q3 of calendar year 2026. As a result, the market has moved from an earlier expectation of 0.3 million tonnes deficit to 1.5 million tonnes deficit for calendar year '26, which should support prices and drive visible inventory drawdowns. At the same time, we do expect a supply response to higher prices, including restarts in Europe and West Asia along with faster ramp-ups in Indonesia and Southeast Asia, which should help rebalance the market over the medium term. Looking at the global aluminum market in Q1 calendar year 2016, Chinese production stood at 11 million tonnes with increase in Yinan largely offset by closures in Shanda. Consumption also moderated to similar levels impacted by softness in building and construction, solar and new energy vehicles, resulting in a broadly balanced market in China. In the rest of the world, production increased marginally to about 7.5 million tonnes, led by capacity additions in Indonesia and Spain, partially offset by lower output from West Asia. However, consumption softened to around 7 million tonnes, primarily due to continued weakness in transport, although paging and electrical demand remained resilient, leading to a surplus of 0.5 million tonnes. Overall, this resulted in the global market also being in a surplus of 0.5 million tonnes during this quarter. Turning to India, as shown in Slide 14. In Q4 FY '26, aluminum demand is estimated around 1.6 million tonnes, reflecting an approximately 9% year-on-year growth. This growth remains broad-based, supported by structural drivers in automotive, continued strength in electrical demand and stable packaging demand. Overall, the Indian market continues to outperform global markets backed by stronger underlying demand fundamentals. Turning to the Indian copper industry on Slide 15. In the domestic copper market demand this quarter, including domestic supply, scrap and imports excluding rose by 10% year-on-year, reaching 402 kt compared to 364 kt in the same period last year. This strong growth was driven by infrastructure investment, increased electrical applications and strong sectoral demand, particularly from white goods and winding wires. The global concentrate market remains in an unprecedented type phase in 2026 driven by a structural mismatch between smelting capacity and mine supply. Spot TCRCs are punched to record lows in the range of minus $0.21 to $0.25 per pound as stronger sulfuric acid realization have partially offset weaker treatment terms, thus sustaining smelter buying interest. This tight market environment is expected to persist through the year. However, a restart or ramp-up of key mining operations in Africa or Central America could provide some relief and lead to some recovery in TCRC levels. Let me now give you a glimpse of our quarterly consolidated and business segment wide performance versus the same quarter last year on Slide 17 and 18. The consolidated profit after tax was down 51% on a year-on basis at INR 2,597 crores this quarter due to the impact of exceptional items, including the impact of the novel Oswego plant fire. If we adjust the impact of this exceptional item, our consolidated PAT stands at INR 5,796 crores this quarter, up 10% year-on-year versus the prior period. At Hindalco India business, our business segment EBITDA was up 17% year-on-year at INR 6,610 crores this quarter, whereas our quarterly profit after tax was at INR 3,549 crores, up 11% on a year-on-year basis. Coming to our business performance this quarter on Slide 18 there. India upstream aluminum shipments were up 2% year-on-year. and revenues were up 11%. Our quarterly EBITDA was up 13% year-on-year at INR 5,448 crores, backed by our resilient performance across the value chain, fully aligned with our philosophy of operational excellence pipeline. This helped us deliver an EBITDA of $1,756 per tonne this quarter. EBITDA margins were at 48% and continue to be among the best in the global industry. Our hedging position for aluminum in FY '27 stands at around 29% of the commodity at $3,013 per tonne and 14% in currency at INR 90.13 per dollar. Our Indian downstream aluminum business continues to deliver a strong performance, while quarterly shipments were up 18% year-on-year at 124 kt. Aluminum downstream delivered a quarterly EBITDA of INR 255 crores, up 16% year-on-year versus INR 219 crores in the prior period. This was driven by higher volumes, product mix and premiumization. The resulting EBITDA per tonne stood at $226 a tonne this quarter. On Hindalco's copper business performance, our overall metal shipments were at 128 Kt, down 5%...

Sorry to interrupt, ladies and gentlemen, we have lost line for the management. Please stay connected by connect the line for the management. Ladies and gentlemen, thank you for patiently holding. We have the line for the management reconnected. Yes, sir, please go ahead.

Okay. So I'm not sure where I got disconnected, but maybe I'll just start with the copper business performance this quarter. Our overall metal shipments were at 128 Kt, down 5% year-on-year, of which CCR volumes were at 91 Kt, up 11% year-on-year with market recovery this quarter. Our quarterly copper EBITDA stood at a record INR 907 crores, up 48% year-on-year on account of better realization in byproducts and operational efficiencies. Novelis recorded a shipment of 917 kt after adjusting for 73 Kt lower shipments due to our Oswego fire, reflecting a decline of 4% year-on-year over 957 shipments in the same period last year. . Adjusted EBITDA for the quarter stood at $498 million or $543 per tonne, reflecting a 5% year-on-year. This excludes the impact of $53 million related to Oswego fire and $27 million from tariffs, partially offset by $41 million positive from the CF flood insurance recovery. Back in April 2025, we set an FY '26 exit savings run rate target of $75 million, which we raised last quarter to $125 million. With another quarter of solid execution behind us, that run rate is now $200 million as we accelerate all cost efficiency initiatives. Looking ahead, we remain committed to our 3-year goal of permanently reducing our cost structure by $350 million to $400 million by FY '28 exit. Additionally, scrap prices continue to move in a positive direction, supporting margin improvement. Coming to Slide 22 in FY '26, our businesses continued to generate healthy cash flows amounting to INR 21,858 crores. This represents a strong 11% year-on-year growth. This performance underscores the strength of our operating model and disciplined execution. At the same time, we continue to invest aggressively in future growth with capital expenditures of INR 31,619 crores, up 47% year-on-year. These investments are focused on capacity expansion that will drive long-term growth. The resulting increase in net debt is in line with our long-term value creation strategy, ensuring that we maintain a strong balance between growth investments and shareholder returns. At the consol level -- at the consolidated level, we continue to maintain a strong balance sheet with net debt-to-EBITDA below 2x at 1.83% at the end of March 2026. The -- despite the temporary impact of Oswego fires, we remain committed to maintain our net leverage around 2x at the consol level. Details of the operational and financial performance in each of our business segments in the quarter, compared to the corresponding period of last year as well as previous quarters are covered in further slides and the next years to this presentation. Let me now conclude tomorrow -- today's presentation with some key takeaways on Slide 29 and 30. At Novelis, our fourth quarter performance continued to highlight the strength of the underlying business, even as we navigate near-term headwinds from tariffs and the temporary outage of the Oswego facility following the fire. In Q4 FY '26, adjusting for these impacts, our underlying adjusted EBITDA per tonne remains close to the $500 mark, demonstrating the resilience of our operating model. The Oswego hot mill is on track to restart in the next few weeks, and we view the outage largely as a timing-related impact with the current year headwinds expected to substantially recover in the next fiscal year. Importantly, our long-term guidance of $600 per tonne remains intact, supported by accelerated execution of our $350 million to $400 million structural cost reduction program which is driving sustained improvements in efficiency and margins. In parallel, we continue to invest for growth with our 600 kt greenfield rolling and recycling facility at Bay minutes scheduled for completion this year. This will position us well to meet growing demand across automotive, beverage packaging and specialty aluminum segment further strengthens our long-term growth outlook. Coming to our India business in this quarter and fiscal 2026, we once again delivered global industry-leading aluminum upstream EBITDA per tonne, reinforming our position firmly within the first decile of the global cost curve. This performance is a reflection of our strong operational efficiency, disciplined cost management and consistent execution across cycles. All our key upstream expansion projects, including Aditya alumina refinery and aluminum smelters are progressing well and remain on track as we advance with our strategy of doubling our upstream capacities. In addition, our captive coal mines are progressing well across stages where Chakla received Stage 1 forest clearance, Minaskshi is currently under Stage 1 approval and Banda completed its box cut this quarter. Once operational, these mines will help reduce our upstream costs and support margin expansion and strength in EBITDA. On the downstream side, we see strong momentum in scaling up operations. The Aditya plant is ramping up well and contributing meaningfully to overall production. Our battery enclosure facility has reached full ramp-up and is operating at optimal levels. The Aditya battery fall unit has been commissioned this quarter, while the Taloja AC Fin facility has begun commissioning with customer qualifications underway. In our specialty alumina business, the precipitate hydrate facility has also been commissioned this quarter and is currently undergoing customer approvals. Our copper business remain resilient with copper smelter and other sustainability-led initiatives progressing as planned. The Inner Group 2 project is also in trial runs further strengthening our downstream portfolio and value-added capabilities. Overall, Hindalco is well positioned for the future, driven by our core philosophy of engineering better futures. Our strategic priorities are clearly defined in our accelerating upstream expansion in aluminum and copper, while driving a fourfold increase in downstream EBITDA in India by FY '30. In parallel, Novelis continues to execute its mid- to long-term 3330 strategy, focusing on delivering sustainable growth and enhance profitability by 2030. I Together, these initiatives position us strongly to capture emerging opportunities and create long-term sustainable value for all stakeholders. Thank you for your attention, and we'll now open up the forum for any questions.

Thank you very much. [Operator Instructions] [indiscernible] First question comes from the line of Sumangal Nevatia with Kotak Securities.

Congratulations on a very strong set of numbers. A couple of questions. First one, I just want to understand the hedges better. We understand the aluminum part. So the currency part, when you're saying 14% of the currency is hedged at 90. Is this broadly the right understanding when we say that, say, half of the aluminum hedges, the dollar is also fixed -- currency is fixed and half will be at the spot currency rate for the 30%...

Sorry, Sumangal, so in FY '27, I'm just going to repeat, we have 29% hedged at INR 3,013. And the currency, we are 14% hedged at 90.13. The hedges are done for the commodity and the currency separately.

And the currency is full India level or only aluminum?

No, it's at the India level because it's a rupee. But it's with the hedge accounting, it will be towards the aluminum sales. It won't be applied towards copper.

That's clear. On overall, on the cost, can we share what is our outlook on the aluminum cost of production going up or down in the coming quarters? And with respect to the coal mines, given now we are very close to commissioning, is it possible to share what sort of volumes we are expecting in FY '27, '28 from captive coal?

So on the cost first, in Q4, the costs were up 2.5% -- 2.4% versus Q3. And in Q4, we were just starting to see the impact of the worst. So I think in Q1, we are anticipating a 5% increase over Q4, and the majority is driven by furnace oil. Furnace oil prices have really gone up high, followed by CP coke and pitch, but furnace oil being the biggest one. The coal prices are more or less still under control. So we think that Q1, we are going to see about a 5% inflation in cost versus Q4. On the coal mines, we did the box cut of Banda, but it's a very high strip ratio. So you're going to see first coal only in FY '28. Chakla, we are expecting to box cut in the next 2 months and the first coal may start to come from Q4 itself. So that's the plan on the mines.

Okay. So '27 also given it is back ended, very minimal incremental volumes from captive coal, right?

That's correct. You're going to see meaningful coal starting to come in only in FY '28. And that too Chakla will be the main one because Vanda has a high box, high strip ratio. It will take us a while to ramp up the production there.

And just one last question. For the Aditya refinery, which is coming up, is the margins completely linked to the index alumina prices? And at the current spot levels around $300, what sort of margins do we expect from a thumb rule perspective from specialty alumina?

No, it's nothing to do with the specialty alumina business, there are 2 bits of it. Some part of it is linked to the index, some part, which is especially the very high value-added VAPs are not linked to it at all. So in our specialty business, probably roughly 50% is index-linked and 50% is value-added, which is not linked to the index. So as the precipitated hybrid project comes in and other, slowly, our plan is to move the specialty business completely away from the index-linked business.

The next question comes from the line of Pinakin with HSBC.

So my first question is the copper EBITDA rose sharply Q-on-Q, and you highlighted higher sulfuric acid prices. So just wanted to understand the sulfuric acid prices have gone parabolic. So does Q4 reflect the entire surge in sulfuric acid realizations? Or should more of it come through over the next 2 quarters?

So Pinakin, the sulfur prices are up largely because of the conflict in the Middle East. So Q1 prices are looking slightly higher than Q4 as well. But I wanted to caution that the moment any straight of foremost opening or thing comes, then you will have to see -- there will be a correction in the sulfur prices because they're really high right now.

My second question is FY '26 CapEx was INR 3,619 crores, primarily given the surge in CapEx at Novelis. Now can you give us a sense of the consol CapEx across India and Novelis over the next 3 years, how it will play out between the 2 businesses?

Next 3 years, maybe not -- let me give you next year. I mean FY '27, the India CapEx will be about INR 12,000 crores. And the Novelis CapEx will be between, I think, Dave has already announced on the call about INR 2.3 billion to 2.4 billion, largely I think it will be fair to say that when you go into FY '28, Novelis CapEx will sharply drop once Bayinet is commissioned and they go into more of a maintenance CapEx frame. The India CapEx will go much higher than INR 12,000 crores because we'll be then getting into the full copper smelter, the Aditya Phase 2 ramp-ups. But I think FY '28 numbers, I'll give you more closer to Q3 or Q4.

So is it fair to say that the consol CapEx should broadly remain in the INR 30,000 crore range for the next few years? Or will the pickup in India CapEx would still be lower than how -- where Novelis CapEx is today?

India CapEx,inakin, INR 12,000 crores this year, next year will be, I don't know, INR 15,00 crores to INR 17,000 crores, but it's not going to be at the same level as Bayinett was. So I do think the consol CapEx of the 2 will be lower.

The next question comes from the line of Raashi Chopra with Citi.

Could you just tell us a little bit about the...

Yes, the spot TC/RCs are running at negative $0.21, like negative $100 right now. And that's largely because the supply and demand is completely out of skew. There's a shutdown or problems in Grasberg, the Cobra mine in Panama is down. So TC/RCs are right now at a negative and probably this year will continue to be negative.

Okay. So for this year, you haven't contracted yet?

No, we are contracted. More than 85% is contracted at the benchmark. So we are going to frankly get TCRCs at close to 0 or slightly negative.

Okay. And what was the fourth quarter hedges in alumina?

Fourth quarter, we were hedged about -- where is it, yes, 64% at INR 2,807 -- and currency was 26% at INR 88.

Fourth quarter alumina sales was how much? And what are you expecting...

Yes. The fourth quarter alumina sales was 211 Kt. And in Q1, we expect to sell about 170. 170...

And just last question from me. The -- how do you break up the net debt for the company on a consolidated level? I think what was the India cash and Novelis net debt we have, what is the India cash?

Yes. So India gross debt is INR 12,200 crores, cash is INR 18,000 crores. So net debt is minus INR 6,000 crores. Novelis gross debt is INR 75,000 crores, cash is INR 11,000 a net debt of INR 630...

The next question comes from the line of Indrajit Agarwal with CLSA.

Congratulations on a good set of numbers. A couple of questions. Can you throw some light on the mid-Japanese port premium that we are seeing? It has rocketed up? And how do you see that panning out? And are we better off more in the export market than domestic today?

It's a good question. I think Midwest are now at $380. So the delta between domestic realization and exports has narrowed down. So it's a call -- I mean, I guess in Q1, probably our exports may be slightly higher. The Midwest, the MGT has jumped up because of the supply tightness as well as the freight prices going up, which is what the premiums reflect.

Sure. And secondly, do you have a peak net debt number in mind? I understand you have a net debt-to-EBITDA number in mind, but absolute net debt number, do you have something in mind on that?

Absolute gross debt or net debt?

Net debt.

So consolidated net debt peak should be between INR 800 crores and INR 90,000 crores over the next 2 years.

The next question comes from the line of Vikash Singh with ICICI Securities.

Congrats on a very good set of numbers. Sir, my first question pertains to Novelis. This coal mill, which we are going to operationalize, just wanted to understand how would be the spreads on the cold rolling only until your hot mill comes into play? And given that the overall commissioning would take a year's time, how should we look at the fixed cost associated with that startup?

Do you want to take that?

Sure. So when we talk about commissioning, we're just commissioning each asset as it comes up. So we started commissioning the cold mill. The commissioning process is typically in the 4- to 5-month time frame from cold commissioning to -- and through hot commissioning. So we will begin commissioning of the hot mill next month. And so as that finishes commissioning, we will then also complete the commissioning of the remainder of the equipment. So by the back half of this year, the full calendar year, we will have all the equipment needed and commissioned so that we can begin qualifying coils or product with our customers and believe that we will enter fiscal '28 with commercial coils being sold at that point in time. Obviously, we've also talked about 18 to 24 months to fully ramp up and get to the capacities that we've talked about of 600 kt. So as we continue to ramp up the facility, we'll size our labor force as much as possible towards what we need at that point in time. So there will be some start-up costs that get excluded from EBITDA as we fully commission the plant. I don't know, Deb, if you want to add anything more on the fixed cost outlook.

Yes. So when it comes to start-up costs during the ramp-up phase, principally, the fixed costs that are not getting absorbed from the point of view of the low capacity utilization are typically in principle, classified as start-up costs and they would basically go below the line, below EBITDA. That is the way we would do it. And as Steve mentioned, our ramp-up period is 18 to 24 months. So by implication, we will reach the full potential of Bay Minute on a run rate basis somewhere in that time frame as we ramp up. That's really how it is.

So just a follow-up. When we talked about the $600 per ton long-term plans on a blended basis, do we factor in the start-up cost below the item as well as the current scrap spreads or the scrap is lagging behind a couple of quarters in our assumptions?

Yes, absolutely. We factor in the fact that during the ramp-up phase, the fixed costs that are not getting absorbed are below the line in net income. We have not factored in current scrap spreads. I mean these current scrap spreads and the current scrap market conditions, we take it as not sustainable, things will come back to normal, and there will be some tightness, which we are aware about. We have factored that in all our plans, including when we talk about $600 per ton to your specific question, no, we are not assuming such optimistic metal prices nor are we assuming spreads staying at current levels. We are assuming that there will be tightening both on pricing as well as on spreads. So $600 per tonne is more like we will achieve it on a sustainable level, not with special tailwinds that we are enjoying now.

Noted, sir. My second question pertains to our coal. Once we get our own coal, given the current prices between the FSAs and e-auction versus our old coal exception. On a landed cost basis, any idea what kind of savings we could still make because coal prices when we bought the coal mines versus right now spot prices, there's a huge difference.

Well, the whole point about having your own mines is that the coal prices go up and down in the market. So you're absolutely right, Q4, the coal prices were low, but we are heading into a monsoon quarter. All we need is one good hard rain in some NCL mine and suddenly, the spot premiums will jump up. So I think the way we should look at our captive mines is that our cost curve gets completely standardized and flat because we control the coal and the pricing for the next 15, 20 years with these mines. So to your point, if we take today's price of coal on the sort of auction price, yes, it is low. So Jaka and Banga will probably be at the same level. Meenakshi will still be substantially lower than today's prices. But I again urge you to look at what it's doing to our cost curve on a sustainable basis.

The next question comes from the line of Parthiv Jhonsa with Anand Rathi.

My first question pertains to the copper business. Now considering Grasberg is not ramping up as expected, number one. Number two, your asset prices are up and your TCRCs are -- because as you mentioned, you are 85% already contracted. So do you expect that this INR 900 crores of EBITDA on a quarterly basis is a new normal till the time global headwinds are not? Or should we expect this...

Our guidance has been INR 600 crores is what we...

Absolutely. Yes, absolutely. That is the reason. INR 600 crores and INR 900 crore is a substantial gap between the 2. And considering the global macros where copper is already sustaining over INR 13,300, INR 400 level and also the crunch is expected to continue for some time now. Do you expect this to remain around say, INR 900 crores to INR 1,000-odd crores on a quarterly basis?

No. I think that Q1, to be fair, will also be in the same range because sulfuric prices are high. But I'm not going to stick my neck out to Q2 and Q3. I would still go back to the 600, 700 per quarter there.

Okay. Okay. That's actually helpful, sir. And just continuing on the question around Novelis, considering 18 to 24 months of a time frame for completely ramping up the facility. And would it mean that you would have a certain -- the time frame to actually ramp it up beyond a certain level to take at least another 2 to 3 years. So will the volume expansion remain within a certain band for next 2 to 3 years?

Actually, Steve, if you got the question, you can answer it, but...

Yes. So the ramp-up from -- once we get to fully qualified coils, we will -- it will ramp fairly evenly over that 18 to 24 months. At times, we'll have to add a shift here or there as we go up. But the guidance that Dev said that as we complete the full commission or the full ramp-up after 24 months, we would be at the run rate of 600 kt and the overall EBITDA per ton that we've been talking about off that facility would be north of $1,000 per ton.

And is it possible to quantify the start-up cost? Just wanted to check on.

We will do that closer to time. But it's not going to be a humongous number. I mean it will be -- if you ask me to say it now, it will be more like in the $100 million to $150 million range annually. But let's just park that for closer to time as we commission.

Your next question comes from the line of Satyadeep Jain with AMBIT Capital.

Just another question on sulfuric acid, the most topical thing. So you talked about the West Asia prices leading to these prices. I also want to understand there's a lot of news flow around China restricting export of sulfuric acid. Have you started seeing that in the market? Is that impacting supplies? And I believe most of sulfuric acid that you said is it to Indian fertilizer and chemical industries. And if that is the case, is government -- or looking at controlling prices -- just trying to understand what's happening on sulfuric acid.

The sulfuric prices actually are set by a global index on a dollar term just like LME is. And China restricting exports means that in the current April month and all the sulfuric prices have actually gone up further. And no, we don't only sell domestically, we also export sulfuric acids abroad as well.

So let's say, you mentioned if West Asia crisis, state of foremost opens, then sulfuric prices will come down. But with China restricting export of sulfuric acid, is there a possibility that these prices stay elevated?

Sid, I have no problem if they stay eleibrated because it helps us because TC/RCs are negative.

That I understood. I was just asking for your opinion on...

Sorry, go ahead.

Secondly, on the Machi mine, I know you mentioned Banda has high strip ratio, it's going to take a long time, slightly longer ramp-up for some box cut. Meenakshi has a very low strip ratio. So should we assume -- I know it's still early for C, but should we assume some volume in FY '29 and the ramp-up from there would be similar to Chakla...

It would be even faster than Chaka because it's got less than 1 strip ratio. So you should see a reasonably substantial volumes coming in, in FY '29 from Meinachhi.

Lastly, the aluminum smelter that you're expecting in '28 and the other one in '29, can you maybe talk about -- you placed some purchase orders, but what is the visibility in terms of civil construction and all for this smelter to get commissioned in FY...

So calendar year December '27, the first 180 ports of Aditya will get commissioned. And calendar year December '28, the next 180 ports of Aditya will get commissioned. We are -- the time lines look fairly firm to us. The first 180 for sure by next year, December.

Your next question comes from the line of Ritesh Shah with Investec.

A couple of questions. Sir, first is on Novelis. We have operations in Ontario. Trump tariffs are still there. There are shipments which move from U.S. to Canada and back. Is there any derisking mitigation moves that your plant with this particular aspect? Steve, do you want to take that?

Sure. Yes, we do have a rolling facility in Ontario, Canada, Kingston. It is fed from our Oswego, New York facility, and then that product is then dispersed primarily into the auto industry, some specialty products as well. So as we've been talking about on the last several calls, we have an overall mitigation strategy as it relates to tariff impacts by sourcing more domestic coal mill capacity inside of the U.S. so that now we can -- as Oswego comes back from the fires here in the next few weeks, we're able to utilize some of the coal mill capacity in the U.S. to mitigate the full impact associated with the tariffs, and we continue to work with both governments for further potential scenarios of relief associated with that.

So just to take it further, with the new coal mill expected for 6 months out, is it fair to assume that we won't ship cargo to Canada and there could be incremental savings given we will say something on the tariffs?

So the coal mill capacity that I'm referring to is not debayonette coal mill capacity. So that is even additional. We've secured additional coal mill capacity with our partnership at Logan. So that's the coal mill I'm referring to and it is more key to getting that Sweedo hot mill back up and running so that it can be supplied. And then we just need to work through the longer-term planning associated with the Kingston mill that also does serve auto with some finishing equipment.

Perfect. That's helpful. Mr. Pai, a few questions for you, sir. Current coal mix, if you could please highlight, I think that's the first question. Second is if you could give some sense on basically where is -- where does the 90th percent of the cost curve currently stand? And the third question is Power has been chased by several other industries, primarily data centers globally. Given we have the advantage of procuring local coal, how do you see the cost differential for Hindalco versus rest of the world? How structural you see and some outlook over there would help.

So the coal mix for quarter 4 was 61% linkage, 30.7% dem auction and the last few were sort of own mines. Your second question was where is the larger cost curve of the aluminum -- so I think it would be fair to say that the majority of the Western smelters, et cetera, they are at least $300, $400 higher than what we have in India. So that cost curve is, I think, more about $2,000 to $2,200 per tonne. Your third question, I think, was on power costs. So you're right. If you are drawing power from the grid, then you are competing with hyperscalers of data centers. But generally, aluminum smelters, whether it's Middle East, us, Norway, Canada, have long-term PPAs with the government and hence, are not really buying power from the grid. where they have a problem like Mozal, they have already shut down or where you have a grid-based power, there the prices of power are going way higher than what a smelter can sustain.

Sir, any sense on what percentage of global production or a percentage capacity, which would be on grid-based power where we will see this calation?

Sorry, it's based on what green power did you say?

Grid-based power.

Even if it's grid, let's take Dunkirk or it is based on the grid, but it has a long-term PPA with the energy provider. So even if it's on the grid, a smelter will not be running on spot power, let me tell you that. So they'll have a long-term, whether it's 2 years, 3 years, they will have a long-term contract with the provider. So I think that the hyperscaler demand is largely a U.S. phenomena right now. And there are very few smelters in the U.S., as you know, there's only Century and probably Alcoa is a small one. So that hyperscaler power thing is largely a European thing where there's very little smelting today.

Perfect. Sir, just last question. Would it be possible to provide some color on off-the-shelf inventories? And secondly, you did touch upon Midwest. If you could provide some color specifically on Europe and MJP premiums as well. The reason to ask this is hypothetically, if Fed increases rates, where do you see the larger impact? Will it be on premiums? Or do you see it on other way?

So look, that's -- I will let Steve talk about Midwest. But generally, aluminum inventory worldwide is around 8 million tonnes, which is 40 days. So it has dramatically come down, especially with the West Asia conflict. The second thing is the premiums generally reflect local phenomena. So MJP is up because of freight going up and Japan availability being low. ECDP will go up because of other factors. Midwest is up because of the Trump tariffs of 50% have been baked into the premium rather than the LME because it's a regional issue. So the LME tends to work on the supply/demand, whereas the premiums reflect local availability and the cost of transportation. Steve, do you want to add anything more on the Midwest?

No, no. I think you've highlighted the tariffs because the majority of the primary aluminum coming from Canada into the U.S., the 50% tariffs is what's driving the higher Midwest premium.

The next question comes from the line of Tushar Chaudhari with Prabhudas Gather Private Limited.

Congratulations on good set of numbers, sir. Sir, can you give us some detailed update on our mitigation efforts for scrap sourcing, which we discussed last year, for example, diversion of landfilling scrap, -- do we got any approvals on it? Has it started? Some details will be...

I'll take that. Okay. So we are working on a number of fronts, as we have been saying to diversify scrap sources. So to some of the things about landfill, no, we don't need any approvals. Here, it is more about working with the municipal recycling facilities, putting in technology and extracting UBCs or scrap that would otherwise go into landfill. So this is not like a few months initiative. This is an initiative that we have started to pilot. And then over time, we will expand it to a larger number of these facilities. But the main thing, which is actually very exciting, and that is what we should be really feeling very good and positive about is that we will have a lot more scrap input coming from end-of-life automotive where we already have a partner who has brought in the technology for scrap sortation. As we speak, the aluminum-intensive vehicles, which have been produced over the last about 15 years, will start more and more to reach scrap yards. And that is where we are creating a supply chain to be able to get very valuable end-of-life scrap for automotive -- and that will have a very positive impact on the margin. It is part of the strategy that will give us access to over $600 per tonne of EBITDA. On the other side, our initiatives are focused on more diversified scrap versus overdependence on UDCs. So basically, we want to really get into more scrap types. So there's a pretty comprehensive slew of initiatives on all the matters that I just mentioned, and we are expecting to get positive results from that over time in short.

Understood. And sir, on domestic, can you give some more details on the smaller projects which we are doing on copper side. So we are around spending around INR 5,000-odd crores like battery grade, copper foil, e-waste IT. So any EBITDA potential at full ramp-up will be helpful.

So one by one. copper project is undergoing qualification with customers today. So that's 35 Kt of copper tube that will go for air condition manufacturing. 50 Kt recycling plant will commission in August. So once that is commissioned, we are going to process copper scrap to get 50 kt of copper. So these are the 2 projects that are in the immediate horizon that are going to immediately impact the copper performance over the next year. The copper smelter will be a few years out. We are just starting that 3 years.

And the battery grade copper file is FY '28, which we had given earlier?

Yes. And we are going to commission a much smaller one because honestly, we are seeing that the battery manufacturing in India has not really taken off as fast as we expected. So that's why we are going to time it a little bit, but a smaller capacity based on even exports, we will be coming up with in the next 2 years.

Ladies and gentlemen, due to time constraints, this was the last question. You can connect with the Investor Relations team for your further questions. I now hand the conference over to Mr. Pai for closing remarks.

Yes. Thank you, everyone. So as you can see, I think the India business is on a solid footing. But I think more important is that Novelis is now coming back. Q4 was a good quarter. And then if Oswego starts in Q1 of this quarter and it gets commissioned. So I think that Novelis is heading to a recovery year in FY '27. So I think overall, that's an important point for us. So thank you very much for your attention.

Thank you. Ladies and gentlemen, on behalf of Hindalco Industries, that concludes this conference. Thank you, everyone, for joining us, and you may now disconnect your lines.