Nava Limited (513023) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nava Limited Q1 FY '27 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [ Shubham Borade ]. Thank you, and over to you.

Thank you, Ananya. Good afternoon to all. On behalf of ICICI Securities, I welcome you all to the Q1 FY '27 Earnings Call of Nava Limited. Today, we have with us from the management, Mr. Ashwin Devineni, Managing Director and CEO; Mr. GRK Prasad, Executive Director; Mr. Nikhil Devineni, Executive Director; Mr. B. Srinivas Rao, CFO; and Mr. VSN Raju, Company Secretary. We will begin with the opening remarks from the management, which will be followed by a Q&A. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and thank you for joining us. I am pleased to share Nava's performance for the first quarter of FY '27. We have started the year on a strong note with consolidated total income reaching an all-time quarterly high of INR 1,269 crores. The quarter reflects the strength of our diversified portfolio and the benefits of disciplined cost management. Our Energy and Mining business delivered healthy operating performance with MEL's 300-megawatt plant operating at a strong 89.3 PLF. Our international foray also continued to provide value through dividend flows and to attain financial strength to pursue investments. At the stand-alone level, the total income reached a record INR 689 crores. Lower coal and manufacturing costs, along with dividend income from Nava Global supported this improvement. We continue to make measured progress on our next phase of growth in the energy and commercial agriculture segment. Our thermal energy, renewable energy, avocado and sugar projects in Zambia are in active implementation and some are set to yield revenue shortly. Phase 2 of MEL is expected to commence operations next year, later than originally envisaged owing to certain challenges beyond our control with no material impact on project CapEx. It is, however, heartening that the 100-megawatt solar power project set to be commissioned shortly would establish a new niche for Nava prompting further investments in this space. We are cognizant of the significant challenges arising from the geopolitical and supply chain disruptions and are taking appropriate remedial actions. Our diversified portfolio, financial strength and operational resilience should however, position us well to navigate these challenges while remaining focused on long-term value creation. With that, I open the call for you... [Audio Gap] political party is improving, many political parties changes since we started. So, yes, we are not affected [Audio Gap].

[Operator Instructions] The next question is from the line of [ Vansh ] an individual investor [Audio Gap]. The next question is from the line of Shree Gopal Kankani. Please go ahead. This is a follow up question.

Sir, my question is because there was some problem in connection, I could not hear your last 5 minutes speech. I just wanted to know what is the expected date of commissioning of this 300-megawatt thermal because earlier...

Mr. Gopal, you have been unmuted, please go ahead.

I am speaking madam -- can you hear me? Hello?

Mr. Shree Gopal, please go ahead.

Are you able to hear me? Hello?

The current participant has been disconnected. We will move on to the next. The next question is from the line of [ Vijay ] who is an individual investor.

First of all, may I know if I'm audible? I got disconnected several times.

Yes, yes, you're audible, sir. Please go ahead.

Yes. I do not hear anything from the other side. Yes. My first question is regarding the company's assets, how they are taken into the books. We have 65 acres of land in Hyderabad. We have some 200 acres in Samalkot and another 20 acres in Dharmavaram, I believe, or maybe the other way around. How are these assets taken in the books?

Mr. Vijay. Can you hear us?

Now I can hear you. I don't know this conference call has been jinxed. I have tried three or four times to get into it.

Okay. You can hear us now, right? Did you hear the prior questions and answers?

Yes. Now I can hear you very clearly. Can I ask my question again or you heard it?

No, no, no. We just wanted to make sure we are audible. So with regard to your question, all this land is recorded in the books at like a historical cost.

So you have these real estate assets, the land assets, your land bank, recorded historical price. What is the reason why they are not being revalued and taken at current value, current market price or at least the current realistic cost because that will change your book value considerably. The book value per share -- the book value per share is very much depressed.

The accounting standard allows us to carry at the historical cost. That is why we are carrying at historical cost.

I see. And what are the management's plans to make these work, these assets work to the benefit of the company and the shareholders?

I think we've been holding these assets for a while. And I think the fruits of that are kind of showing with valuations really going up. It's good that we did not sell these assets at an earlier stage. Otherwise, we wouldn't have -- wouldn't be realizing the greater valuations. But what we have done is just to understand what opportunities we have today, we have engaged a third party to study, investigate with the current asset values, what are the possible options that are available for us in the event we want to do anything today. So that study is currently ongoing.

Yes. We've been hearing this for quite some time, but we have to make these assets work towards company's plans. For example, the company has recently changed its memorandum of association and brought in a lot of additional avenues for power generation, such as solar, wind, nuclear, et cetera, et cetera. So with these, you will need capital and that capital can come only from these assets rather than borrow.

Yes, I don't think we have an issue in terms of capital right now. All the projects that we are envisaging and that are currently underway are adequately funded, and we have enough equity and cash in our books to fund that. We don't need to sell the assets in distress to basically generate cash at this point. So as a company, we feel that -- and I think it has paid off that we have held on to these assets. Yes, we have been saying that. But for example, if we had sold these assets years ago when we were being questioned about the assets, I don't think we would have realized the appreciation of the assets in terms of how they've gone up.

Mr. Ashwin, if you have invested that asset value at that time into newer projects, the new projects would have also generated additional projects.

Once again, Mr. [ Vijay ], I'd like to state that we are not -- it's not a situation where we are not undertaking projects because we don't have cash. Whatever projects we deem fit where we look at the risk and so on and that we want to undertake, we have adequate cash to fund those projects.

My next question is about the holding of Zambia assets. Initially, Zambia project was created through out of Nava Limited profits, Nava Limited funds. Subsequently, Nava Global seems to have taken over these assets and they are now being shown as profits accruing to Nava Global and Nava Global giving dividend, buying back its own shares from Nava Limited with that money, et cetera. So who is the ultimate owner of the Zambia project, number one? And number two, is Nava Global, is there any plan for spinning it off the way this thing -- the foreign projects are going and spinning it off or demerging it and going in for an IPO?

So first and foremost with regards to the large assets, and I'm sure you're talking about the Maamba asset, it was always under Nava Global. The only difference was Nava Global was called Nava Singapore in the past. It was not like it started with Nava and then we moved it to Nava Global or anything of that sort. So we always had Nava Global as the international asset holding company that we wanted to grow. Today, Nava Global has multiple assets. It's got the current Maamba power plant. It's got Maamba Solar Energy as a company. And there may be -- we have got the mine in the Ivory Coast and there may be other international assets that could fall under it. So it does operate independently. The ultimate owner, yes, is Nava because it owns 100% of Nava Global.

So you are telling me that Nava Limited is 100% ultimate owner of Nava Global?

Yes, that's right.

Okay. I will go back in the queue. [indiscernible] call disconnected several times.

The next question is from the line of Kaushik Doshi from ICICI Securities.

My first question is regarding Zambia. How is the situation in Zambia currently? And due to West Asia crisis, do we have any power disruption in Zambia?

Sorry, can you repeat the question? I think a little slowly.

Am I audible? Hello?

Yes, yes. Just go a little slow.

Yes, my first question is regarding the Zambia currently. How is the situation there right now? And due to West Asia crisis, are we facing any power disruptions -- do we have any power disruptions?

Disruptions you have. Hold on. Yes, the situation is fine. Currently, there are no power disruptions there.

And my second question is due to West Asia crisis, are we anticipating any increase in the supply of coal in Zambia?

Supply of coal in Zambia? Sorry, can you repeat the question?

Mr. Kaushik. Mr. Kaushik? Ladies and gentlemen, we will move on the next participant, [ Vansh ] an individual investor.

Yes. So one more question I had was the deferred tax loss -- deferred tax expense that you have shown in the books, is there any scope of stabilizing it? Or will the INR 160 crores, INR 200 crores per year mark will be always there as deferred tax expense?

You are talking about consol level?

Yes, on the consol level, I'm talking about. Last year, it was INR 261 crores. And this quarter, we have again shown INR 40 crores and last quarter it was INR 163 crores because of the Zambian and USD currency problem. So what is the situation over there?

Now the [indiscernible] is around INR 18 as on 30th June. So it is stabilizing as on today. We don't -- you never know what happens in the future, likely it depends upon the prevailing exchange rate as on the date of report...

So if the currency stabilizes, then this INR 40 crores will become again the next quarter will not be there, right?

Yes. It may get even reversed also.

Okay. Makes sense. And moreover, like the previous question about the assets that you have, if I may, what is the current value of those assets?

What assets are you referring to?

The Hyderabad assets, the 200 acres that you have?

The historical cost of Macherla land is around INR 40 lakhs in our books.

And what will be the current value approx?

I think that's something that the report that we have commissioned to the third party that I mentioned will possibly bring out. The value is moving. I think every call is moving fortunately upwards too. So it's appreciated a lot from, I think, the past few years.

Yes. But if we can get an idea, that will be great for shareholders around...

Yes. But I don't think we would want to speculate on giving a number because this is a moving -- this is real estate at the end of the day.

Yes. No issues. And moreover, the mining that you were taking on the exploration part, what is the status on that?

So there are 2 parts to it. I think you maybe referring to the manganese mining or exploration...

The manganese and the lithium mining that you were exploring.