Nava Limited (513023) Earnings Call Transcript & Summary

I'm sorry, could you repeat your name, please?

Samil Surendran.

Okay. So Samil, I think in -- I won't be able to give you projections in terms of sales realization. But as per our capacity, we produce 27,000 metric ton every quarter. And fortunately, for quarter 4, the demand has been extremely good. And so we are in a position we are where all our stocks are booked already.

And sir, in terms of demand from the steel industry, how do you see the demand? Do you see them reaching pre-COVID levels now?

We've already started to see that trend where the demand and prices have reached pre-COVID. But on this note, let me just -- today, as we speak, our current steel production stands at 111 million tonnes. And if you see the national steel policy, it envisages that India's steel production would rise to 300 million tonnes by 2030. So this poses a huge demand situation for silico manganese. Furthermore, I think the per capita steel consumption of India is only at 74 kgs. When you compare that with the world consumption, it is at close to 200 kgs. So this again poses a huge demand uptick for silico manganese and other alloys related to steel.

[Operator Instructions] Next question is from the line of Vishal Chandak from Emkay Global.

Sir, this is with respect to this arbitration that we have right now. Assuming that we do win this $400 million worth of receivables which is due, how do we plan to monetize this or at least recover this? Does the counterparty has that kind of resources available with them or we would be seeking lien to the coal mine? How do you plan to kind of recover this money even if we win the arbitration?

Yes. So in terms of the arbitration, I don't think we would -- given that the process is currently underway, I don't think we would want to comment at this stage in terms of recoverability and how we plan on doing so at this point in time.

Sure. Sure. And sir, we had also discussed about opening the other side of the mine for commercial coal mining, and you mentioned last time that some progress has already been made. If you could kindly update us on where we are with respect to that side of the coal mining.

Yes. So the one business that has been doing fairly well in Zambia is the coal mining business. And we're fairly profitable. It provides actually our company with a fair bit of liquidity and cash. And also, what we have seen quarter-by-quarter is the sales realization and the quantities have increased. So we have, as you rightly said, opened up another pit called the Kanzinze pit, which is on the left-hand side of the concession area. And coal extraction from the pit has commenced. So with that, we hope to see increase in sales quantities owing to the pit producing very high-grade quality coal for sales.

Sir, in the new pit, what kind of calorific value and ash content are we having in that particular mine?

So I mean, it does vary. Right now, I think the coal that we are kind of extracting is about 5,500 GCV. And you're looking at -- the ash always varies. Generally, the ash content in Zambian coal is fairly high, but I mean we kind of restrict it to below 40% to 40% ash.

That's post washing or pre-washing, 40%?

That's pre-washing. I'm talking about ROM coal -- run-of-mine coal.

[Operator Instructions] The next question is from the line of [ Vijay P], an individual investor.

Yes. My question is regarding the asset monetization plans of Nava Bharat. We have 4 land banks: Nacharam in Hyderabad, some 50 acres; Kakinada, some 200 acres; Samalkot, some 20 acres; and the sugar plant of 5,000 tonnes per day which has come in the market now. The first 3 have been talked about by the company for a long, long, long time, but there is no progress. Please correct my figures if they are wrong as far as the acres that I mentioned. Can you please brief us on the plans on asset monetization, which investors are waiting for a long time?

Yes. So I think let me start off with the sugar. As you rightly said, that came up available once we stopped running our sugar operations. So in terms of the assets, the sugar plant assets, we are disposing of the assets. We're currently in the process of evaluating bids, and I think that will be concluded shortly. And then we are also -- with respect -- we also have about 100 acres of semi-urban land in Samalkot adjoining the sugar plant. So currently, we are evaluating opportunities of developing that land. So that's something that's currently underway. In terms of Nacharam, we are awaiting -- it is under a court process. We are awaiting a court order, and the court process is currently ongoing. But what we do see is with the government change in the policy shift, the Nacharam land value has definitely increased. And I think once the court process, the legal process is out of the way, I think we should be able to monetize it and benefit from the increase in prices. Last but not the least, you did mention the Dharmavaram piece of land, which is near the Kakinada port, that we are currently looking at a couple of different verticals where, such as food processing and so on, that could be utilized, to use that land rather than just an outright sale. We're actually looking at using that land for expanding in other verticals.

Dharmavaram land is 200 acres?

Sorry?

Dharmavaram land parcel is 200 acres?

Yes, the Dharmavaram land is 200 acres, yes.

My next question is about the ferro alloys market. We just made a statement that we are fully booked for this quarter, and the market is booming. If we look at the history of the company, there has been no expansion in the ferro alloys plant for almost 15, 20 years. So what are the company's plans to meet the expanding ferro alloys market since India is going to touch 300 million tonnes of steel?

Yes. No, I think with respect to the ferro alloys market and expansion, one thing we are privy of, and always concentrate on, is we want to backward integrate. And I think one of the things we are currently doing is evaluating mining assets, and we're about to acquire a mining asset in the Ivory Coast. So I think once we have our hand on the raw materials, then we will definitely look at opportunities in terms of increasing our ferro alloys production. Nikhil?

As you right rightly pointed out, it is the time when ferro alloys is booming. But again, we should always keep in mind that this is a cyclical industry. You will have your booms and times when prices are also at the rock-bottom, which is the majority of the time. So one way to take advantage when prices are low is, as Ashwin pointed out, to backward integrate and have a firm cost on our inputs. So in this -- on account of this, we are looking at options, various options across the globe where we are trying to acquire mines with good grade of silico manganese to produce at our factories.

Okay. So currently, there are no concrete plans for increasing the ferro alloy capacity from the current 200,000 tonnes further?

I think we first want to have some security of -- over our ore and then take up any expansion plans. Because right now, we are -- even if we do expand, the procurement that we have is from various sources, which the prices are based on index prices. So there is not a big margin to be made on those index prices, particularly when the sales price of silico manganese is low. So we feel that once we -- we have input security, then we can look at expansion.

My next question is about the plans for sugarcane plantation in Zambia. Are these plants still on or it has been abandoned?

No. See, I think with respect to -- you're talking about the company Kawambwa Sugar in Zambia, we have a couple of hectares already planted with sugarcane. But unfortunately, that project is taking a little longer because there are certain commitments from the government that needed to be fulfilled such as basic infrastructure like roads, electricity and so on because if you are going to farm large scale, you need a fair bit of electricity, you need road access and that basic infrastructure. So that has been kind of put on hold for the time being until the government meets its commitments. And in the interim, we are also testing out other crops that could possibly be grown there because it's a very, very large area of land.

My last question is about the pharma initiatives in Singapore. Can you give us some brief or color on what is going on currently and what is the future for this business?

Yes. So in terms of the health care division, it's basically segmented into 2 verticals. One is we have clinics, which is a delivery point for intravenous iron and other services. And then we also have a pharmaceutical distribution wing, which distributes a lot of these drugs. So -- and we have exclusive distribution rights for high-dosage intravenous iron drug both in Singapore and in Malaysia. What we have realized is from the Malaysia side of things, things have been going very well. Our top line has increased significantly. So that looks to be fairly promising, and we plan on bringing in probably other drugs into the distribution wing. On the clinic side, that has done fairly well, and we are looking at expanding within Singapore on the clinic side of things.

Did this business generate any profits this quarter?

Well, I mean, the clinic side of things has just broken even. And now that we're going to expand, we hope that will generate profit sooner rather than later. But it is going to take a little more time for the distribution side of things. And COVID definitely has not helped because it has prevented a lot of our reps from meeting the doctors face-to-face and so on. So it's going to take a little longer, but we hope that this vertical will be profitable soon.

The next question is from the line of [ M. Srinivas Rao ], an individual investor.

How much is the amount admitted for arbitration in regard to MCL? And is there any further additional outstanding amount from MCL in the current quarter also? If so, what happens to that amount? Will it be admitted into the arbitration?

[ Mr. Rao ], arbitration is for the outstanding of the arrears which are outstanding since the beginning of the PPA term. So the amount may vary depending upon the time of the arbitration or beginning of the arbitration. So we are not, at this point, able to confirm what is the exact amount that could be negotiated. So -- because that is a subject matter.

Thank you very much. As there are no further questions, I now hand the conference over to Mr. Vishal Chandak for closing remarks. Over to you, sir.

Thank you, everyone, for joining in on the call and asking these questions. I think we have all gathered the answers that we are looking for. Thank you. So any other questions, feel free to contact me or the Investor Relations. Thank you very much. I'll hand over the floor to Mr. Ashwin for his closing remarks. Over to you, sir.

Thank you, everyone. Thank you very much for your participation in the call. I hope we've addressed all the queries adequately, or as Vishal said, if there are any questions or clarifications that remain unanswered, please get back to us, and we would be happy to provide answers on a wider investor platform. Thank you all once again.

Thank you very much, members of management. Ladies and gentlemen, on behalf of Emkay Global Financial Services Limited, that concludes today's conference call. Thank you all for joining us, and you may now disconnect your lines.