National Aluminium Company Limited (NATIONALUM) Earnings Call Transcript & Summary

Good morning, everyone. Good morning, and welcome to the 3Q and FY '25 conference call of NALCO Limited. On behalf of Systematix, we welcome you all today. We are joined by Mr. Shri Brijendra Pratap Singh, Chairman-cum-Managing Director; Shri Ramesh Chandra Joshi, Director, Finance; Shri Srimanta Panda, EPO ED, Finance; and Mr. Bharat Kumar Sahu, Company Secretary, representing NALCO Limited today with us, to discuss the 3Q FY '25 financial results. Sir, thank you so much for joining us today to discuss your results and performance for third quarter and 9 months of FY '25. We can -- I hand over to you, sir, for your opening remarks. And then subsequently, we can open the floor for a Q&A session.

Thank you, Shweta. A very good morning to all our esteemed stakeholders to this earning conference call. I'm happy to share with all our valued investors that during the third quarter of FY '25, NALCO has registered its highest-ever quarterly as well as 9 months cumulative turnover, profit after tax and EBITDA since inception. NALCO has declared second interim dividend of INR 4 per share, followed by the first interim dividend, which was also INR 4 per share, making it the highest-ever dividend declared by NALCO so far, driven by better sales realization in Alumina and Metal segment, higher sales volume of Alumina, use of captive coal and reduction in cost of raw materials. Profit in [indiscernible] has surpassed threefold 2024 Q3. On a stand-alone basis, NALCO has registered a cumulative PAT of INR 3,246 crores during the 9 months period FY '25 as against INR 1,044 crores during the corresponding 9 months period of the previous fiscal. The cumulative PAT up to December '25 is higher by 211% compared to the previous 9 months period. Turnover during the 9 months period is INR 11,434 crores as against INR 9,506 crores in corresponding period of previous year, which is higher by around 20%. During the quarter, NALCO registered stand-alone PBT of INR 2,122 crores and PAT of INR 1,583 crores compared to PBT of INR 68 crores and PAT of INR 488 crores during Q3 FY '24. The increase in profit after tax is around 224% during Q3 FY '25 compared to Q3 FY '24. I'm confident that the strong financial performance reported has further reinforced the trust and confidence of all our stakeholders in NALCO. These robust numbers are a testament to our resilience, strategic vision and commitment to delivering sustained value. They reflect not just our financial strength, but also the trust our investors, stakeholders and partners place on us. As we move forward, we remain dedicated to upholding this confidence by driving growth, innovation and long-term success. Now management will give a presentation before taking questions.

Good morning. My name is [ Ravi ] and I'll take you through a small presentation that we have prepared for this earnings call conference. The [indiscernible] presentation would cover the company [ at a glance ], physical performance of the company in the last 3 quarters, financial highlights. The industry outlook, which would include the global as well as the Indian scenario, and business highlights, apart from the [indiscernible] on [ ESG ]. We have the Navratna CPSE, with the government of India holding of 51.28% as of 30/09/2024. We are one of the largest integrators of bauxite, alumina and aluminium power and coal complex today. We are also the global leader in producing bauxite and alumina at the lowest cost. Our facilities include a bauxite mine of 6.825 million tonnes per annum, refinery of 2.1 million tonnes per annum. From there, we have the finished goods, which are alumina hydrates, special hydrates and calcines alumina. Our smelter plant is 0.46 million tonnes per annum, and the products that are smeltered are the standard ingots, T ingots, billets, wire rods and rolled products. So this will include basically the primary aluminium products as well as secondary products, which is [indiscernible], wires and those products. We have a captive power plant to supply the power to the smelter plant. It's about 1,200 megawatts capacity and the [ plant coal ] for this facility is a 4 million tonnes per annum coal mine, which is nearer to the CPP [indiscernible] kilometers from where the captive power plant is located. We have dedicated facilities at Visakhapatnam port for the export of our aluminium. The dedicated port has automated loading system as well as storage facilities. Besides of course, we also have import storage facilities at Visakhapatnam port. In addition to all these facilities, we also have [ dedicated ] wind power plants [indiscernible] specifically Andhra Pradesh and Rajasthan. And the combined capacity is about 198 megawatts. On the production front in the third quarter, the -- all the facilities are working at 100% capacity as of today. And we have the performance for the [indiscernible] stream, the first column, and we have [indiscernible] production in bauxite, alumina, metal, as well as thermal power. In comparison to Q3 of 2024, we developed significantly higher except in the case of metal, where we have made several internal technical adjustments in our smelter plant. However, we would be achieving the kind of [indiscernible] the capacity of our plant of 0.46 million tonnes per annum. For the 9-month ending, it's a tad over where the metal is concerned at 342, but [ potentially ] the 0.46 million tonnes per annum capacity by the end of this quarter. On the sales front, third quarter has [indiscernible]. The third quarter has shown some [indiscernible] performances. The sales volumes have continually increased where the alumina export is concerned, and that has also helped -- being helped by the metal prices in the last 2 quarters starting from the end of the second quarter, end of third quarter. Metal export, you can see is 0 when compared to Q3 of 2024, and that's primarily because [indiscernible] can be higher and the [indiscernible] market is also being driven by the infrastructure and the transportation sectors. The domestic market and sales have been robust. The financial highlights have already been explained to you by our Director of Finance. The highlights, of course, will be up for discussion after we finish this presentation. One of the highlights, is of course, we have had the highest-ever revenue from our operations, the highest level of profit after tax, highest EBITDA margin, and the highest-ever dividend [indiscernible] NALCO in the 45 years of our -- in business. One of the benefits that we have got from our quarter 3 results come from the material [indiscernible]. Now since we are exposed to the commodity cycles, the aluminium prices in the last 2 -- since April 2024 has seen an exchange up and down. For the last quarter, [indiscernible] upward trend of aluminium. Beginning of the year, potash was somewhere [indiscernible]. However, the market dynamics have changed, primarily because of geopolitical reasons. And then there was an impact on the price of alumina because of some sales coming from Papua New Guinea as well as Australia. Subsequently, of course, this has changed. And we expect that by the end of 2025, that there will be a small surplus of primary aluminium in the world market. We are still seeing the action of the tariffs that [indiscernible] aluminium from the U.S. The [indiscernible] on this particular tariff will be emerging over the next few days. And there's a lot of [indiscernible] next few days. Globally, the global dynamics that I mentioned in the earlier slide, we expect that by [indiscernible].

Sorry to interrupt, sir. There's a lot of disturbance on the line. Yes, it's better now. Sir, please carry on.

For the 9 months, there has been a better dynamic where metal [indiscernible] is concerned. We see a small deficit in terms of the -- better than the levels in the market. However, we expect that this is going to be very marginal because we expect more metal to come back into the market from [indiscernible] when the new tariffs that has been announced in the U.S. The alumina scenario was [indiscernible] October and November of 2024. So [indiscernible] in upstream in terms of [indiscernible] the market, and we expect the surplus by the end of [indiscernible]. The industry outlook in India has been far more positive in terms of the growth in [indiscernible] infrastructure conditions and, of course, the electrical sector, which is taking a large chunk of the aluminium usage in India. The consumption in India in '23/'24 was about 4.9 million tonnes. And going by the estimates and the market analysis, by 2030, in India it is estimated that this particular consumption will increase to about 8.3 million tonnes per annum. So for the aluminium sector in India, the infrastructure, electrical as well as transportation are going to be the growth drivers in the next 5 years, and that is reflected in the kind of investments that are happening in this area. It was also announced in the recent budgets. We are, of course, one of the largest integrated operations. We are located strategically on the state of Orissa itself. So all our plants are within this region. And logistically, we are well connected with respect to access to the traffic from our respective plants. The [indiscernible] are very close to the refinery as well as CPP. So the supply constraint when it comes to bauxite as well as aluminium -- sorry, coal, is managed very well. Besides, there is a lot of infrastructure that have been happening with respect to the transportation of the [indiscernible] plants within the state of Orissa in the last 6 months. We have 0 debt, which can be leveraged given the strength of the balance sheet to fund our smelter and expansion plans, which will come in the next 5 years' span. We have, in fact, raw material securitization, where caustic soda as well as coal is concerned, is something that is [indiscernible] for the company. In fact, it is now 2 years coming. And we are seeing incremental benefits of the securitization that has appeared in the last 6 to 9 months. Our refinery capacity is currently under expansion. And the expansion -- expanded capacity with respect to the downswing by end of the financial year. And one of the benefits of that will be gained from this expansion is the revenue that will be generated from [indiscernible]. And in fact, in the first year, we would expect to produce about 5 lakh tonnes and increase to 1 million tonnes, which [indiscernible] capacity of the refinery expansion. The excess demand that will come from this refinery will go to the smelter, which is [indiscernible] in addition to our existing smelter plant. The plan is to have a 0.5 million tonnes smelter plant near our existing smelter in the next 5 years' time, and the capacity from this -- or the capacity from this smelter will give the scope for going downstream into extrusions as well as other value-added products. These are some of the projects that the company is already into. Bauxite mine expansion will have a capacity of 3.5 million and we have seen the expansion that is happening at the alumina. The bauxite mines is expected downstream by the end of '25/'26. The alumina refinery which is also an expansion of the existing capacity is at 1 million tonnes per annum, also expected to be completed in the upcoming financial year. The aluminium smelter is [indiscernible] which has already been done. So the land acquisition activities and other sector [indiscernible] are already underway. The capacity for this aluminum smelter is 0.5 million tonnes per annum, which is again expected in '29/'30. And to build this aluminum smelter, we will also be having a captive power plant at the same location, which should be about 1,200 megawatts capacity and which is also [indiscernible]. Now just focusing on the business of aluminium, alumina and bauxite. We are also, of course, focusing on several of the ESG requirements within the organization. The objective of course is to minimize environmental harm and implementing effective risk management strategy. Because at the company, because we are also doing a [indiscernible] activity where we're exposed to a lot of regulations within the ecosystem. And so the key initiatives to mitigate to bring the company to forefront of focus into the environment are afforestation, waste water utilization, advanced pollution control technologies, water pollution management, biodiversity protection, as well as efficient fuel handling. In fact, our bauxite mine is 98% free -- blast-free mining, activity is [indiscernible] in our bauxite mine. As part of the plantation activities, we have planted close to about 150,000 trees in '23, '24, which is up 14.3%. About 14.3 hectares have been mined out of the mined-out areas and been rehabilitated with plantation in our bauxite mines. Of course, we also use fog cannons and auto sprinklers to suppress dust in our mines. And the ash utilization at our refineries, this is the part of -- we have a small [indiscernible] plant over there, it's about 100 -- it's more than 100%. In fact, at the bauxite mine, we have recently come up with the biodiversity conservation policy, which is one of the first cases that we've been doing in terms of biodiversity conservation. And aside from this, we have also set up a wind power plant, which I've already mentioned earlier. And in addition to that, we are also setting up rooftop solar. Currently, we have a capacity of 800 kilowatt of rooftop solar and we plan to add 7 megawatts of rooftop solar in this organization within the next 1, 1.5 years. Socially, we have a lot of interventions that are happening in the peripheral villages of the plants. Some of the flagship programs over here, I would like to [ bring to ] your attention. Indradhanush program, which sponsors kids from the underprivileged area in the Damanjodi sector, and we provide them education and enable them to attend reputed residential schools in this area. In fact, close to 800-odd kids are already currently studying in schools over there. NALCO ki Laadli is another classic program that we have, which is aligned with the Beti Bachao, Beti Padhao mission in the [ heart of ] India, where we support over 280 meritorious girl students from middle parts of the Angul and the Damanjodi sectors. We have 8 mobile health units which deliver services in and around 250 peripheral villages and really more than 1 lakh patients benefit from this effort of ours. Apart from these flagship programs, we also have other social projects for constructing roads, repairing them, bridges, development of school infrastructure, community infrastructure, and drinking water projects. Finally, on the governance front, we have 10 Board-level committees for ESG governance, and we have 15 core policies and guidelines for the governance activities. Our self-appraisal for Q3 '24/'25 of all the ESG guidelines was excellent. And we have a very fair treatment for investors, dividend policies and reporting transparency. We have regular risk assessments and evaluations to manage risk within the organization. And we have, of course, a number of these ISO certifications, which ensure that our processes are aligned with standard business practices. Thank you.

Thank you, sir. So we can now proceed with the Q&A session. We have a lot of participants raising their hands, so I'll take questions one by one. First question comes from the line of Mr. Amit Dixit.

Good morning. I'm Amit Dixit from ICICI Securities. I have 2 questions for you, sir. In the slide where you mentioned about the CapEx projects. So just wanted to understand the total CapEx that has been committed for these projects, if you can mention project-wise, that would be great. And the sort of CapEx outlook that we could expect over the next 3 to 4 years.

The CapEx record for this year was around INR 2,000 crores. And expected expenditure will be around INR 1,500 crores we'll be doing. Major shortfall, some AMR schemes we have taken at the refinery and our smelter plant, and some of the AMR schemes we have taken for sustenance. Those AMR schemes, maybe some shortfall will be there. And in our refinery scheme, in our refinery expansion -- 5th stream expansion plan, there, also some shortfall is there. But as far as refinery expansion is concerned, maybe December -- September is our target. In between September, December, we'll be finishing this. So CapEx next year also, our plan will be around INR 2,000 crores.

Okay. In addition to that, what CapEx line, Amit, right now, we have 5th stream refinery expansion is on and we are spending about INR 5,677 crores on 5th refinery -- 5th stream. And we have the expansion of Pottangi mines. There, we'll be spending about INR 1,961 crores. So these 2 projects will be completing in the next 1 year or so. After that, we are going for smelter expansion at the cost of [ INR 17,160 crores ]. The DPR is already approved by the Board. And for sourcing the power, we are planning to go with a JV with NTPC. For that, again, there will be a project cost about INR 13,000. So these are the projects lined up in the future.

Great, sir, that's very helpful. The second question is on the coal security. So as I understand, we have a couple of blocks with us. So just wanted to understand the current EC limit for these coal blocks. And is there a possibility of getting further enhancement on EC? And what kind of coal security we are targeting in the future when the [ aluminium ] plant also comes up, the new one?

As far as coal requirement for our CPP is concerned, we have a requirement of around 7 million tonnes. And we have got 2 coal blocks, that is Utkal D and E, both 2 million tonnes, 2 million tonnes. 4 million tonnes will be the total coal which we'll be able to produce. Last -- this financial year, current financial year, we'll be going up to 3 million tonnes because for Utkal E, some [indiscernible] delivered there. We have got [ premises ] for that also. Net financial year, around 4 million tonnes we'll be producing. So whatever coal we were taking through e-auction, that we'll not be required to take, e-auctioned coal and all will be produced through this Utkal D and E.

Next question is from [ Sumaya ].

Sir, I hope I'm audible.

Yes, you're audible.

So first question is on your alumina. If you could just help with the -- in terms of pricing, so this is M minus 1, M minus 2, how does the pricing work? How much would be spot? That's one. And also in terms of export markets, which are the markets and what is the regional premium that we have an exposure to?

You are talking about spot prices? Alumina spot prices?

Alumina realizations, this is more to do with how the pricing works there. So I just want to understand whether it's an M minus 1 pricing, how does it work?

Alumina prices actually, on an average, the trend has been around maybe $400, $430, $450, it used to be in the previous years. But this year, in between -- in June, some shortfall in alumina production was there in Australia. So the prices shot up of this alumina export prices to around $800 spot prices. Now that plant in Australia has already started. So the demand gap, the supply-demand ability, which was around 4 to 5 lakh tonnes in maybe Q1, Q2, that has come down almost -- the demand-supply gap is not there. So current spot prices is going to around $530. So maybe further in the coming times, it may come down also.

And during third quarter, we have got $641 average price of alumina. And up to 9 months of this year, it is $562. And regarding spot and term contract, we decide strategically when to go for spot and when to go for term. And since in this year, the price was in the increasing trend, so most of our sales in our spot business.

So even if it's a term contract, so this will be based on M minus 1 or M minus 2 pricing, that's how it will work there?

Yes, yes.

Sir, also, this new project that we are bringing online, the new refinery expansion, in terms of cost or in terms of margin profile, would it be similar to our existing one? Or would there be any difference, either it will be higher or lower in terms of contribution?

Cost-wise, whatever alumina will be produced here, that will be almost same to the existing one because the raw material, whatever, bauxite we are getting, that will be from the same mines and one more mines, how many mines we have got. They are just nearby. No major transportation cost will be involved. So the cost will be almost same to the existing alumina cost.

Sir, one small clarification to the earlier question on CapEx. So you mentioned close to Pottangi mines plus this refinery somewhere around INR 7,500 crores of CapEx, INR 5,600 crores plus INR 1,900 crores. So of this, how much has been spent so far? And how much is remaining? That is one. And second thing in terms of the smelter capacity expansion that you are talking about, when will the CapEx outflow for this start? And also the NTPC number that you said, if you can just repeat, that should be helpful.

As far as this refinery in Pottangi mines is concerned, refinery, our total CapEx plan was around INR 5,700 crores. And out of that, INR 3,500 crores already we have spent in that. And till date, around 70% completion of the job, physical progress is there. We are trying to commission this project in September. And mines -- Pottangi mines, almost all clearances we have got. And the CapEx there is around INR 2,200 crores. We are going in for tender, maybe this month itself, February, end of March. The [ 94 ] MDO appointment, MDO Appointment Board, has given the clearance. We are going to appoint an MDO for operating that mine. We're trying to place order by June -- May, June, so that 6 months' time will be there for MDO to start the mines. Maybe in between September and December, somewhere, we'll try to start the Pottangi mines. And as far as our smelter is concerned, that is the expansion of smelter, 0.5 million tonne smelter expansion we are planning with -- in addition to our existing capacity, for which DPR has been made by EIL. And DPR is approved by the Board. The Board has given in-principle clearance. We are going in for a technology partner, which EIL has selected was [ Alcan ], Rio Tinto Canada, and we are into negotiation with them for supply of technology. And almost the negotiations on the verge of finalization. So once that is over, maybe this month itself, we'll be going for preparation of tender document, technical specification with EIL. And our plan is that -- so that this tender and all the document within the next 6 months, we should try to float the tender and award the tender maybe next 7, 8 months, so that the job starts after that. And maybe next 4, 5 years, we should start the smelter plant, because the commissioning itself will take 3 to 4 years of the plant after ordering. And along with that, 1 power plant also will be required because smelter will require a captive power plant. For that, we'll be going -- trying to go in a joint venture mode with NTPC for setting up a power plant. Till then -- till that time, we -- what we are observing, we have an additional casting facility of aluminum of around 1 lakh tonnes. We are trying to increase our hot metal production, which is around 4.5 million tonnes. Trying to take some small projects so that our hot metal we can increase the capacity or maybe use some scrap so that this casting facility, whatever extra casting facility we are having, to increase the cast metal production. We are going for -- giving -- appointing EIL as a consultant to give some kind of feasibility whether that is possible or not.

The next question is from the line of [ Devi Agarwal ].

Sir, my question is on the macro side. So can you throw some light on the alumina and the bauxite pricing and the entire situation right now? Because we are seeing the alumina prices are corrected, but the bauxite prices are not being corrected in the similar tandem. So will trend continue? Or how is the situation right now?

Just -- you can repeat your question? It was not clearly audible.

Am I audible now, sir?

Now it is okay.

Yes. So I just wanted to know about the current scenario on the alumina as well as the bauxite pricing scenario, because if you see the alumina prices have reduced, but the bauxite prices have not reduced in the similar tandem. So will this trend continue going forward? Or how will be the gap going forward in the coming quarters or the coming years?

Actually, alumina prices depends on demand supply, what is the alumina production and bauxite prices also on the mining -- cost of the mining is there. So bauxite cost almost remains always constant. But alumina is totally dependent on the production from the smelter. A few of the smelters were closed down due to high alumina price. So when the smelters will start operating, the alumina demand will also increase. But alumina production, which was on the lower side earlier. Now there will be an excess of alumina in the coming times. So we are seeing that this -- whatever the spot prices are now, around USD 530 is the spot price as of date, that may go down in the coming time. That may go down to maybe $500 or $500 below.

Next question is from Sumangal.

This is Sumangal Nevatia from Kotak Securities. First question on the overall employee cost. So since last few years, it's been steady, around INR 2,000 crores, INR 2,100 crores a year. Can you guide us how are we looking at it over the next 1 to 2 years? And in terms of annual retirements, et cetera, how are we positioned?

Employee cost will remain at the same level, about INR 2,000 crores to INR 2,100 crores. And this 9 months, you must have seen that the employee cost has come down by about INR 150 crores. That is because of onetime provision we have made for nonexecutive PRP. So that's why this INR 150 crores about expenditure has come down. But our employee cost will remain more or less in the same range of INR 2,100 crores to INR 2,200 crores, even after expansion.

Understood. Sir, annually, how many employees -- what is the employee count trend in terms of retirement over the next 2 years?

Next 2 years, about 200 employees will be retiring. Next...

That's for each year?

Each year, it's about 40.

Understood. Understood. That's helpful. Sir, on the coal sourcing, just continuing on the previous question. In the first 9 months, have we completed this 3 million tonnes which we are expecting this year? Or it is distributed coming also in the fourth quarter? And so can you give us the mix of the coal sourcing currently in the 9 months?

Yes, yes. Coal sourcing this 9 months -- just one moment. Yes, 49% we have sourced through linkage, 4% through e-auction and balance, 47%, is captive.

Okay. And sir, next year, if you're doing 4 million tonnes, so then out of 7 million, 4 million tonnes would be captive and 3 million would be linkage, right?

No. See, it will be 50-50 only, because our -- I mean our machinery or our technology wants that mix of 50%, 50%. Otherwise, it is creating some problem in the process by using more of a linkage mixed captive coal because of its quality. So it has to be mixed 50%, 50% to have a right mix of...

Understood. And sir, what would be -- so in between -- we were hearing that there could be an expansion of capacity from 4 million to, say, 5.5 million or something given some automatic approval of EC extension. Is that not now currently on the [indiscernible]?

20% if we achieve the target of 4 million tonnes, the automatic of 20% we can increase. That is around 80 lakh -- 80,000 tonnes we will be able to increase. That will be coming in the subsequent year. If next year, we'll do 4 million tonnes, then the subsequent year we'll be able to -- further go to maybe 4.8 million tonnes.

Understood. Understood. And sir, what would be the cost difference between linkage and captive? Or is it similar cost?

Linkage and captive, there is a price difference of about INR 400. But linkage in any case, we are going to use. We should see the price advantage of not using e-auction and using captive.

Yes, yes. But that is already behind us, right? I mean incrementally, we don't expect any further major reduction in cost on the coal front. Is that the right way to understand?

Yes, yes.

Understood. That's very clear. Sir, on the overall alumina volumes, currently, we have 2.1 million tonne capacity. So on rated basis, our external sales can be up to 1.3 million tonnes also. But our current run rate is much lower. So what should we expect for external alumina sales in the fourth quarter and then in FY '26 without the new refinery?

Actually, for our smelter operation, we require around 0.9 -- around 0.9 million tonnes, 1 million tonnes we'll be requiring for smelter. So out of 2.1 million tonne goes to smelter, we are left with 1.1 million. So maybe 1.1 million will be the figure which will be going for exports or maybe domestic sales, including -- major will be exports.

Okay. Okay. Understood. And sir, just on the CapEx. I mean for the smelter, we will start spending from FY '27. So we are looking at -- I think we said INR 17,000 plus another INR 13,000 for the power plant. So what sort of annual CapEx could we see from FY '27 onwards?

If we see -- in the initial year of financial year '27 you are talking?

Yes, that's right. When we start spending for the smelter.

Then, typically, hardly, it will be around maybe 10%, 15% of that. Because initially all drawings, approvals and all that will be there. So maybe 10%, 15% of the total whatever CapEx will be there. And in the subsequent 2, 3 years, it will be 25%, 25% like that, 25%, 30%. So first year, it will be hardly 15% to 20%, 15% max.

Okay. Okay. And smelter plus power would be around INR 30,000 crores, right? Is that the right understanding?

Yes, yes.

Okay. And just one last question on the new refinery, which is coming up. So we have a substantial amount of CapEx still left. So how confident are we of this commissioning by December? Or should we expect some more delays? Because in the past, we've continuously seen delays because of some issues or the other. So what sort of volumes and commissioning should we expect on a conservative basis?

Actually, as far as this refinery is concerned, after joining, I visited there 2 times and I was there for 2, 3 days dealing with all the parties who are doing the job. And I'm very closely monitoring that. And we have found that a few packages, some delays are there. We have highlighted also those things. And we are trying to take care that -- September, we were targeting earlier. But by December, at least we should try to finish off. And whatever actions we have taken, we are confident enough by December we will be finishing and starting the trials of the commissioning.

Okay. So when do we expect commercial volumes? Is it FY '27 then?

Commercial volume will start next 3, 4 months when we start the trials and all that. FY -- yes, until maybe FY '27, March, April onwards, the commercial volumes will start.

Okay. Okay. And sorry, just last one. In this INR 2,000 crore CapEx, what is our maintenance CapEx for existing capacity? And how much is the growth CapEx for all this future refinery and smelter expansion?

INR 700 crores is for this, and expansion is INR 1,300 crores.

Okay. So this INR 700 crores, INR 800 crores is something which will continue?

Yes.

So we'll take the next question from [ Karnay Karnagal ].

Am I audible?

Yes.

Yes, yes.

Congratulations on a great set of numbers. I think most of my questions have been answered. Just wanted to know, in this quarter, we have seen a higher depreciation than usual and also interest expense. So is that a one-off? Or should we expect it to be in that range only going forward?

Actually, we have impaired 2 wind power mill at Rajasthan for which the implication is INR 106 crores, because we do not have the PPA right now. But we are injecting the power whatever we are generating into the grid. We have a joint reconciliation also for that. We'll be getting that money in future, but we are not accounting it. So as per the accounting standard, we have impaired both the plants. So that is -- that effect is INR 106 crores.

Okay. And also, this INR 13,000 crores that we have budgeted for the captive power plant for the new smelter expansion, so that will be of what capacity?

Around 1,200 megawatt.

1,200 megawatt. All right. And so we are considering a JV with NTPC. So will it be like a bigger power plant that both the companies will make and 1,200 megawatt will come to us? Or will it be like 1,200 megawatt in total and then some part of it will come to us?

That will be total 1,200, and that will be for captive use for that smelter only. Whatever expansion we will be doing, that will be for captive use for that.

Okay. So the JV with NTPC will just entail that -- like just wanted to understand what will be the role of NTPC in that?

JV with NTPC is just in the initial phase of our negotiations with NTPC. We had an MOU earlier. And maybe how much partnership and all that, that will be deciding in the coming times. Just we are starting the negotiations and all that with them.

Okay. And this will be a coal-based power plant?

It will be a coal-based power plant. But out of 1,200 megawatts, actually in the JV, we'll be putting 1 condition because in the new regulatory norms that is coming, that 30% of the total power should be green power. So we will be still not -- we have not finalized the capacities and all that. Maybe 30% -- 25%, 30% will be going for green power. If we are able to, that NTPC is able to source the green power or maybe some other green power is available somewhere, so we will reduce the coal-based power plant capacity. Maybe it will become around 700 or 800 and just green power we'll be taking. So that will come out after the total final discussions with NTPC.

We'll take the next question from Rajesh M.

Yes, am I audible?

Yes.

Yes.

This is Rajesh Majumdar from B&K Securities. I had a couple of questions. What is the current cost of production of alumina in dollar per tonne? And what is the current cost of production of aluminium, assuming the alumina is transferred at the cost of production in dollar per tonne?

The cost of production of alumina, it ranges from INR 21,000 to INR 22,000 based on the prices of raw material. Presently, it is hovering around that INR 22,000. And aluminium also it varies from INR 160,000 to INR 165,000.

This is based on alumina being transferred at cost, right?

Pardon, please?

This is based on alumina being transferred at the cost price?

Yes, at cost price. At cost price.

At cost price. Okay. So my question was that, sir, your cost of alumina has gone up over the years. At one stage, it used to be nearly $170, $180. Now if you look at the conversion, it is now almost close to what, $240, $250 per tonne. So with the new -- I understand that the Pottangi mines are requiring much more consumption of raw materials, et cetera, to make the same tonne of alumina. So with the Pottangi mines in operation, will we see a reduction in the cost of production, hopefully, because those mines are very old and these are new mines, where the cost of production should be lower? That was the first question, sir.

Cost of production of bauxite, you are talking?

Alumina.

Alumina. Alumina.

Spot production of alumina, whatever is presently there, it will be almost same. Because over the years, what you are telling like earlier, it was $180, now it is around $240, $250. The increase is due to the increase in the maybe employee cost or some other raw material costs. And whatever bauxite, like cost of bauxite, whatever bauxite cost we are getting is now around INR 1,000. INR 1,000 per tonne in bauxite cost. So there also, in Pottangi also, the cost of bauxite mining will be around 1,000 tonnes, what we are estimating. So it will remain almost same, which is at the present level.

No, sir, because the mines are new, won't the quantum of caustic required per tonne of alumina go down in the new mine?

Specific requirement of bauxite will be slightly less, will be slightly less, because now it is on the higher side because some quality issues. But we'll have to see once we start the mine, actually. Still now, we cannot say.

But with the new technology, we'll be saving about 6, 7 kg of caustic soda. That will be saving.

Some cost [indiscernible] yes. That will be will be lower. How much impact will be there?

Impact, maybe about [indiscernible].

Because in this new refinery, the existing refinery, whatever caustic soda consumption is there, that will go down. That maybe reduce the cost of -- maybe overall caustic soda cost, whatever now is there, maybe it will be reduced by INR 600, INR 700. That alumina cost will come down by around...

But the depreciation cost will be adding, because we have no...

Depreciation cost will be added, yes.

Overall, in the same range.

So when you give a cost of $240, you are including the depreciation? this INR 21,000, INR 22,000 includes depreciation cost, is it?

Yes, yes, yes.

And even aluminum, INR 160,000, INR 165,000, includes the depreciation cost?

Yes, yes. That is a total cost.

Okay. Including -- okay. That's useful. But INR 600, INR 700 per tonne, will be the saving on the raw material cost, that's what you see?

That will be saving. And also there will be substantial saving in employee cost also, because the employee will not increase proportionately. So there will be major saving will come from employee cost.

Right, sir. That's useful. And secondly, sir, I was curious about how you would expand the hot metal capacity. Because I understand we have 960-odd ports which are now like in a configuration with 1,200-megawatt captive power. So how is it possible to increase the capacity there by 1 lakh tonne or something? Is that -- what is the technical capability of that?

Actually, that was the thought process when I joined here and I was going through all the plants and all the details. So I thought that hot metal capacity is 0.5 million tonnes and our casting capacity is around 0.6 million tonne. Hot metal is 0.45 million, around 1.5 lakh tonnes gap. So we have requested EIL to make a study. It cannot come as it is. We'll have to do some investment, maybe adding some ports and increasing maybe some captive power also. With small investment, we can have this increase in the capacity of the total overall cast metal. Because for that, our alumina supply and maybe downward casting facilities are already there. Only a number of ports will be required to be added. Of course, we'll have to take some CapEx for that. We have engaged EIL for that to do some study and suggest what can be done. Second option is maybe taking in some scraps. If we get good quality scrap, we'll try to source, and that scrap adding to the casting, along with the hot metal, we can increase the casting capacity. These are the 2 options which we are working. These are just the initial thought process. Because whatever casting facility is there, we are not able to use that. We are trying to see what way we can go, maybe short term, medium term, long term, so that to maximize the use of existing casting facilities. But whatever expansions we are planning, that will go as it is.

That's useful, sir. That's useful. And sir, my last question is for the smelter and CPP CapEx, will the company be taking on debt? Because historically, we've been 0 debt across all our expansions, but alumina refinery is not a small -- is a very small investment, and smelter and CPP is a substantially larger commitment. So will we be changing our capital structure for that? That was my last...

Yes, yes. We have to go for leveraging definitely. We have to go for debt.

So do you have any debt equity ratio in mind for the new project? Any ballpark idea of that?

No. If you take a ballpark figure, then for this kind of capital-intensive industry, and you have gestation period of 4 years. So -- and with our continuous internal revenue condition, then we can afford to have 70-30, no issue with that. And if we are ending the financial year with more than 17,500 net worth, so company will be in a very good position to finance entire CapEx of our metal and power plant expansion through external financing.

We'll take the next question from [ Ajit Dartha ].

I formally welcome our new MD and Chairman, sir, to NALCO. We are a long shareholder of NALCO. And congratulations on a good set of results, sir. Also this time...

Thank you.

Yes, very heartening to know that we are coming up with this presentation and investor con call, and I sincerely hope that we will continue this and present a good governance. Sir, my question is regarding the CapEx that you have just mentioned. Firstly, on the captive power plant of 1,200 megawatt, INR 13,000 crores is looking very steep. So how should we understand this? And if we combine the 0.5 million capacity of the smelter also, so INR 17,000 crores for smelter, INR 13,000 crores for captive power plant, INR 30,000 crores -- by investing INR 30,000 crores, how much incrementally we are going to earn per year? That's my first question, sir.

That will be -- we'll be adding around 5 lakh tonnes of metal production. That will be the main year, and the revenue generation will be around -- it will be increasing the revenue generation overall by around INR 11,000 crores to INR 12,000 crores.

[indiscernible] crores.

Yes. More importantly, NALCO has been in the primary metal [indiscernible] now. With this addition of 5 lakh metric tonnes, it will give us space and led to into extrusion and other value-added products, downstream products, which will be much more immune to LME fluctuation. That is also one of the most important factor. Because there, the margin is well protected from LME cycles. That leverage we are not having as of now, with only 4.6 lakh tonne.

Really appreciate this clarification, sir. So just wanted to have a more better understanding. What are our internal projections? How much IRR or return we would be generating by investing this INR 30,000 crores over a period of time? So annually, INR 5,600 crores EBITDA, incremental EBITDA.

Since the earlier DPR we had prepared in 2019, what, with [ 500 ]. Now our [indiscernible] will be visiting and we are going for the latest technology that is available, which will be still expected to be more cost efficient, more energy efficient and environment sustainability. So that again has to be revisited. And with our -- we are also trying for further coal mines if we are going for this. So that projection will be revisited with all the updates.

Any plans to bid for the bauxite ore mines, additional bauxite?

Additional -- this bauxite, whatever bauxite mines we are getting, Pottangi mines, actually, that will be sufficient for next 15 to 20 years because the reserve there is around 120 million tonnes. And 3.5 million tonnes, which we'll be taking, that will be feeding to the alumina -- whatever alumina refinery. We are going for 1 million tonne alumina refinery. So this will be sufficient for feeding to our refineries for next 15 to 20 years. But whatever auctions are coming, some of the mines are coming for auctions, we'll be going in for auctions.

What are we -- hello?

Yes.

Yes, sir. So incremental EBITDA per tonne, what would be the EBITDA per tonne incremental for the new capacity, from the 0.5 million tonnes which we are planning?

Actually, those financials have not been worked out till now in detail. Initial feasibility report was given by EIL. Once all those technologies and financials will be fixed, then only we'll be able to tell it.

Sir, one last question, just on the captive power plant. So my understanding was that INR 13,000 crores for a 1,200-megawatt CapEx plan is very steep. So -- and is NTPC also going to invest in our JV?

Yes, yes. And we'll be going for joint venture, they will be also investing in that. So -- and in this INR 13,000 crores, whatever is told was the initial projection, maybe when we'll be going with NTPC and maybe 20%, 30% of green power, this will again see some kind of changes in that.

Okay. Okay. And this whole CapEx of INR 30,000 crores includes our proposed CapEx for the value-added products as well? We won't be investing more for value-added products?

No, no, no. This is excluding value-added products.

Excluding it. Okay.

We'll take the next question from Aditya.

I'm Aditya from Axis Securities. Most of my questions are answered. Just a couple, a few. So on the alumina refinery expansion, so from FY '27, what kind of run rate in sales volume can we expect?

What kind of -- just you can repeat?

The utilization of alumina refinery in FY '27, how much sales volume can we expect from that directionally?

FY '27, if we are going to -- our target is December, we'll be trying to start the commissioning process and end up in next 2, 3 months. FY '27, we will be targeting maybe 1 million tonne capacity around 70%, 70% -- 60%, 70%, around 7 lakh tonnes we'll be producing, 7 lakh to 8 lakh tonnes. It all depends on the commissioning, how fast we will be doing the commissioning.

So that means we can operate it at a rated capacity, right, for FY '27?

Yes.

Okay. And we had a joint venture in Argentina for our lithium brine blocks. Any update on that? Anything material which you can share?

You are talking about that lithium in Argentina?

Yes.

Yes, KABIL, we have gone in for a joint venture. KABIL has been formed between NALCO, HCL and MECL. Already 4 mines have been allotted there by CAMYEN, which is a mining company of the state of Argentina. And invasive exploration have started there -- noninvasive exploration has started there, wherein the result of that noninvasive exploration will be coming March -- this 25 March. After that, we are going in for appointment of -- we have already set up an office there also, COO of KABIL and all that has been appointed. And after March, we are going to appoint one PMC consultant for appointment of invasive exploration partner, wherein the time lines are around maybe '26, maybe May, June, we'll be completing the exploration. After that, 1 pilot plant study has to be done of whatever exploration results are coming. And after that pilot plant study, maybe somewhere in '27, mid-'27, we have to take a decision on doing the mining of those blocks, depending on whatever the results of those explorations are coming. A bigger time line, noninvasive exploration, we are completing March. After that, final exploration will take 1 year. After that pilot study, then mining investment.

So anything related to CapEx or any financial number? Or it's slightly premature at this stage for this?

Till now, early to state that because just noninvasive exploration is going on. Once the results of some noninvasive exploration come, then only we'll be able to know how much quantity and how much -- what grade of lithium and all that is available. So it is very premature to tell anything about that.

Sir, can we take a couple of more questions or -- if time permits?

Yes, yes. Yes, we can have 2, 3 questions.

We take the next question from Manav Gogia.

Yes. I hope I'm audible.

Yes, yes. You're audible.

Sir, one question I wanted to ask was can you give me the landed cost of caustic soda for the particular quarter?

It is INR 37,000.

INR 37,000 per tonne, right?

Yes, yes.

Okay. And I think we just talked about the reserves and resources at Pottangi mines, that is around 120 million tonnes. Could you give the latest number for Panchpatmali mine as well?

It is about 145 million balance.

145 million is the balance. Okay, sure.

Next question is from [ Saket Kapoor ].

Sir, I joined a bit late. A couple of questions, sir. Firstly, with the capitalization of, I think, some of our projects, our depreciation costs have gone up to INR 286 crores for this quarter. So if you could just highlight, this will be the run rate going ahead? Or how much is still left to be capitalized for the fourth quarter?

No, no. 5th stream is yet to be capitalized. The depreciation cost has gone up mainly because we have made an impairment provision of INR 106 crores for our wind power plant at Rajasthan. Because we don't have PPA in Rajasthan, so we have made an impairment provision of INR 106 crores. That's why depreciation is showing a higher value. There is no capitalization as such, major capitalization happened from the 5th stream.

5th stream capitalization will start when the commissioning will start. The commissioning maybe will be starting in December, September, December. After that, the capitalization of 5th stream will start.

And sir, what is then the closing balance of capital work in progress as on 31st December?

Capital work in progress...

Next point is about the current price trends for alumina and the global market scenario. Sir, if you could just outline to us what factors are currently influencing the prices. And going ahead with the tariff war issue that [indiscernible].

You're talking about global alumina prices?

Yes, global alumina prices and the factors that are affecting the price trends currently, sir.

Actually, this global alumina prices totally depend on demand-supply equation. In between -- and the prices shoot up to $800. That was just because of there were some supplies issues in Australia. Some plant of alumina was stopped and a few supply issues of bauxite from New Guinea was there. And now those plants have already started. So as of now, in quarter 1, quarter 2, there was a demand-supply gap of around maybe 5 lakh, 6 lakh tonnes. But as of now, this quarter, we see the demand-supply gap is not there. Whatever demand requirement is there, so supply is almost matching. So that is why the prices have also started falling down, which has come down to the latest spot price is around $530. So it totally depends on the -- what is the production and what is the supply and what is the demand. As far as now U.S. tariffs are concerned, latest U.S. tariffs have been imposed, 25%. It can have some impact, maybe some of the aluminium which was going inside the U.S., if that prices goes up and that doesn't go into the U.S., maybe it will be coming to the other market, increasing the aluminium -- putting the pressure on the aluminium prices, reducing the aluminium LME prices. Or maybe some of the smelters, we can see that the smelters, it's not viable and the prices are coming down, maybe some of the smelters closing down. And if some of the smelters are closing down, the requirement of alumina will also go down. So that will impact the alumina prices also. So we'll have to just see because whatever tariffs have been imposed, final decision still some -- it awaits, what will be the rate of those tariffs. We'll have to see that. But ultimately, alumina, because it cannot be stored for a long time, so whatever production is there, that has to be consumed. So whatever requirement from the smelters are there, that's whatever number of smelters are operating. If demand-supply is matching, so the prices will remain somewhere around, I think, $450 to $500, somewhere in between that.

CWIP, what you are asking is about INR 4,500 crores.

Okay. And any project you will capitalize for the fourth quarter?

Fourth quarter, no major capitalization will come.

Okay. And last point, sir, $530 is what you mentioned was the current prices, and you are expecting prices to trend between $450 and $500 for alumina going ahead. So what was the average realization for us for quarter 3 in terms of the alumina that we have [indiscernible]?

$641 was the realization in quarter 3, $641.

And sir, the tonnage?

9 months, it is 562.

Tonnage, you are talking about tonnage?

Yes, sir. Tonnage for the third quarter and the expected tonnage for Q4 in the trend line, if you could give.

Third quarter tonnage was 3.75, 3.75 -- sorry. Alumina export was 3.66 and domestic was 0.09. So total alumina sales was 3.75 million tonnes in third quarter.

And Q4 [indiscernible], sir? The expectation?

About 4 lakh will be there.

And prices will be?

Prices will be around 600, I think.

Around 600 prices will be in Q4 also, because we don't spot booking [indiscernible] this will affect after -- come in 2, 3 months. Q4 whatever is going will be the spot prices already booked earlier. So Q4 maybe also will be getting average realization of around 600-plus.

Okay. So we are looking to close the year on a very high note, sir, the Q3 capacity? [indiscernible] and financially, how much to close the year?

Yes, yes.

[Foreign Language]

[Foreign Language] Thank you so much.

Sir, can we take the next question?

Yes, let us take the last question. Okay.

Last question from Vikash.

Congratulations on a very good set of numbers. Sir, just 1 -- couple of questions. One clarification on the refinery CapEx. We said about roughly about INR 5,700 crores, but we understood that there was a cost escalation in the CapEx. Total cost has already run closer to INR 7,000 crores. So if you could clarify that?

No, there is -- after cost escalation, this is the price, INR 5,700, okay? And INR 7,000 crores, what you are talking, that is inclusive of Pottangi mines. INR 7,500 crores is the total CapEx. Only refinery is INR 5,700 crores, which is after escalation.

Understood. And just second question on the employee cost. How should we look at the employee cost, because the pay commission is coming? So have we taken -- started taking some provision regarding the same? Or your expectation on the escalation in the employee cost going forward?

Pay commission will be coming after 28th. Pay commission for CPSE has not yet been set up. It is for central government that has...

January 27 only.

January 27. So we will...

No provisioning has been made. No provisioning has been made for that.

Thank you so much, sir. Any closing remarks from your side and then...

Thank you very much. First of all, I would like to congratulate the whole of the NALCO team and all the shareholders, all the stakeholders who have been supporting the company in all their performances from all our supporters, all our investors. And we would like to ensure that in the coming time, the priority -- our total priority will be fixed on 2 areas, that is how to increase the efficiency of the present operation, putting the focus on the future expansions. As far as our present operations are concerned, 2, 3 areas we are focusing is increasing the volumes, whatever volumes we are doing this year. We are trying to increase the volume next year, maybe by 5% to 10%. Smelter, it will not be possible. But of course, refinery we'll try to increase the volumes by doing some modifications there and reducing the cost. And also one area we are working that is to increase some value added in maybe alumina, in maybe our aluminum production, some of the value-added products to add on as a short term or medium term. So that our existing operations, we increase our revenues, increase our profitability, so that whatever expansions will be coming in the coming time, we'll be able to fund our expansions in an easy manner. And expansions already we have explained, whatever as per plan, to keep an eye on expansion and put a very active role in completing all this alumina expansion and going for smelter expansion. Thank you once again, all, for all your questions, all your queries and all your support provided by everyone. Thank you. Thank you very much.

Thank you.

Thank you, sir.

At NALCO, we're thrilled to see a large number of participants, which at one point of time touched 100. So that shows your keen interest of all this, our esteemed analysts and investors, in NALCO and its futuristic plans. And we look forward for a similar kind of response in future also. Thanks once again. And particularly to Shweta, ma'am, and [indiscernible] ma'am, to organizing this session. Thank you.