Nava Limited (NAVA.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Nava Limited Q1 FY '26 Earnings Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Kumar from ICICI Securities. Thank you, and over to you, sir.

Thank you, Shubham. Good evening. On behalf of ICICI Securities, I welcome you all to the Q1 FY '26 Earnings Call of Nava Limited. Today, we have with us from the management, Mr. Ashwin Devineni, CEO; Mr. GRK Prasad, Executive Director; Mr. Nikhil Devineni, Executive Director; Mr. K.V. Vithal, CFO; and Mr. VSN Raju, Company Secretary. We'll begin with the opening remarks from the management, which will be followed by Q&A. Thank you, and over to you, sir.

Thank you. Good afternoon, ladies and gentlemen, and thank you for joining us today. I am delighted to share that Nava has once again set a new benchmark, delivering its highest ever quarterly profit in Q1 FY '26, a clear reflection of strong and consistent operational performance across all businesses. Consolidated revenues reached INR 1,213 crores, rising nearly 15% sequentially, while net profit surged over 61% quarter-on-quarter to INR 490 crores. This exceptional growth was driven by robust energy operations, higher realizations in our metal businesses and disciplined cost control. One of the most notable achievements this quarter was the sharp improvement in Maamba Energy Limited's receivables position where areas of USD 75 million successfully collected. Equally, significant was made with the median dividend of USD 32.5 million declared by MEL, further strengthening our balance sheet and enhancing cash flow visibility. On the growth front, we are making steady tangible progress. The MEL Phase 2 expansion adding 300 megawatts of capacity and the 100-megawatt solar project in Zambia are moving forward on schedule. Our commercial agriculture initiatives in Africa are advancing with Avocado plantations poised for their first commercial harvest later this year and the integrated sugar project progressing as planned. In India, our strategy to convert captive power plants in Telangana and Odisha into independent power producers, will enable higher PLF and open new market opportunities. This quarter's performance highlights not just the resilience of our business model and the strength of our execution capabilities, but also the clear momentum in our strategic growth initiatives. We are building on this foundation to deliver even greater value in the quarters ahead. I now welcome your questions. Thank you.

[Operator Instructions] The first question comes from [indiscernible].

Congratulation on the set for receiving out on the receivables that were due in MEL. I just wanted to know that the outstanding receivables are now USD 85.5 million. So how much of this are you expecting for this year, basically for FY '26?

Yes. So I think with regards to arrears, like I've mentioned on the previous calls, too, this is a constant discussion process with ZESCO. We expect to receive the entire $85 million in arrears before the end of this financial year.

Okay. So entire receivables would be receivable by this entire year basically?

Yes.

Got it. Got it. Another question that I had was last con call, you told that there are tax exemption will continue for the entire financial year. But this year, the tax was there. Could you just throw some light on the same?

Yes. So we have rented the tax position in consultation with the local tax authorities in Zambia. And we have received a confirmation that from this year onwards, which is financial year '26 onwards, part of the tax consumption will not be available. So just to clarify, up to last year, we had 100% of the power profits -- profit generated out of the power business was exempted. For the next 3 years, which is FY '26, '27 and '28, we will be taxed at 50% of the tax rate, which is 15%. And the last 2 years, we will be taxed at 75% of the tax rate, which is 22.5%.

The next question comes from the line of Viraj Mahadevia from MoneyGrow.

Congratulations on stable results. Just if you could elaborate please a little bit on the sugarcane or the sugar plant in Zambia. You mentioned the power plant has been set for relocation. If you can elaborate what that is, why you decided to enter sugar in Zambia and how this $200 million will be funded as an equity?

See, the sugar plant -- the cogeneration power plant has been with us in Nava since 2017 in an ideal way. What we found is we could actually have that relocated as part of the KSL integrated project to obtain 2 benefits: one, to meet full power requirement of the sugar project and also to provide an opportunity to sell power in that region, which is very short in terms of power. That's how the proposal is to relocate the 20-megawatt power plant to Zambia.

So sorry, just to understand the full thought process, the [indiscernible] stocks on the plantation as part of the sugar power plant to generate electricity, which is sold back to the grid. Is that correct?

No, no. This power plant has been idle. It has not been generating any power in Nava. What we are proposing to do is to have that allocated to Zambia to obtain a better value. Otherwise, we need to have it scrapped here. So what -- by doing the relocation, we actually are getting a much value upside in terms of the capturing the entire WDV value of that sugar plant. The gas from processing the sugar would be used as fuel. Part of the power would be used for captive use by the sugar plant and the remainder balance will be sold in the open grid.

Understood. Can you elaborate what the $200 million is required for if the plant is already exist in India and ship to Zambia?

I'm sorry, can you repeat?

The press release, does CapEx outlay for the sugar project is $200 million?

The $200 million comprises the full pledged plantation. The plantation cost also is included in that $200 million except from the actual sugar plant, the cogeneration power plant and digital level.

Okay. [indiscernible].

Sorry?

Over what period will these investments be made?

This will get spent till April 28, by when we expect the crushing and sugar production commences.

So next 2 financial years?

Yes. Two financial years?

[Operator Instructions] The next question comes from the line of Nidhi Shah from ICICI Securities.

So my first question is on MEL, too. So I just wanted to ask what is the CapEx that was done in Q1? And what is the CapEx that remains for this plant?

See, MEL started the Phase 2 works in August '24. Currently, the process is on and the expenditure -- that the incremental CapEx that you see is practically on MEL Phase 2 is about INR 700 crores incremental one -- sorry, it's about INR 600 crores. And the balance will happen over the next 4 quarters. We expect the bulk of that CapEx getting incurred in that period with the balance towards the commissioning phase, which is in Q2 of FY '27, end of Q1.

All right. My second question on this is that I recall that 70% of the power -- the capacity for Phase 2 has been tied up. So what was the tariff for that? And what is our plan for the remaining 30% that is currently untied?

No. Sorry, 100% of the power is tied up.

Okay. So that's remaining 30% is another player? Or is it the same?

No, it's always been the state utility ZESCO. We have a PPA with them for all our powers.

What is the tariff of that PPA?

9.5 tonnes per kilowatt hour.

Okay. And on Ferro alloys, my question is that the volumes and the realization as per the PBT have gone up significantly. Yet we see that PBT is down on a Y-o-Y level. Were there any, say, extraordinary or onetime costs?

No. So I think in terms of the overall market for Ferro alloys, there's been not much of a difference compared to last quarter. It still continues to remain in a fairly subdued manner. But I think over the last quarter, you saw better realizations on 2 counts. One is the reliance upon the Japanese market where we have a long-term contract, that has yielded far better results than the spot market. And adding to that is the product diversification into Ferro silicon. That too has helped us achieve better results, mainly owing to the exports made to the U.S. So both these things jointly has yielded better realizations.

So sir, my question primarily was that the realizations are better and the volumes are better. So why is PBT down this quarter for Ferro alloys like on a Y-o-Y basis?