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

Ladies and gentlemen, good day, and welcome to Nava Limited Q2 FY '26 Earnings Conference Call hosted by ICICI Securities Limited. [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. Good evening. On behalf of ICICI Securities, I welcome you all to the Q2 FY '26 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. K.V.S. Vithal, CFO; and Mr. VSN Raju, Company Secretary. We will begin with the opening remarks from the management, which will be followed by Q&A. Over to you, sir.

Thank you. Good evening, everyone, and thank you for joining us today. I'm pleased to share that the second quarter has been another strong period for Nava, marked by consistent operational performance and strategic progress across our businesses. In line with our commitment to shareholder value, I'm also pleased to note that Nava has declared a 300% interim dividend, which marks the highest ever interim dividend in its history. And this further reinforces our strong balance sheet and consistent track record of rewarding shareholders. We also continued to deliver steady dividend distributions from both Maamba Energy and Nava Global, reflecting our healthy cash generation and disciplined capital management. This remains one of our key strengths and a clear demonstration of our focus on delivering sustained returns to our shareholders. Our revenues grew steadily, driven by robust performance in the Metals segment and sustained momentum in our Energy business. One of the key milestones this quarter was the successful transition of our Orissa captive power plant into an independent power plant, a move that strengthens our growth trajectory in the energy sector. Our new projects, including the 100-megawatt solar power project under construction and the 300-megawatt expansion at Maamba are advancing well, laying a strong foundation for the next phase of growth. Above all, our long-term fundamentals are robust. We will remain agile, prudent and committed to rewarding your trust as we advance our business aspirations. I now open this call for your questions. Thank you.

[Operator Instructions] The first question is from the line of AM Lodha from Sanmati Consultants.

Am I audible, sir?

Yes, you're audible. Please go ahead.

Sir, I got two questions. One is energy sale relating to outside India and energy sales inside India, number one. Number two, regarding employee cost. There are two questions which I'm asking you first. Sir, total energy sale is down from INR 1,045 crores to INR 876 crores in quarter 2. This is partially on account of shutdown in Zambia as well as lower price realization in the domestic front. Please can you clarify this?

Yes. So the energy sale, the drop is on two counts. One is there is a planned shutdown, semiannual shutdown in our Maamba. That is one reason. It is a one-off, and it was planned. And the second one is on account of lower demand in India on account of the prolonged monsoon and weather conditions.

Sir, can you quantify the Zambia loss of revenue in the shutdown -- in amount, money -- in terms of money?

We'll get back to you, Mr. Lodha.

Okay, sir. Now regarding same energy question -- next question is regarding to energy. This is continuing the first question. 60-megawatt Odisha power plant commenced this IPP from 1st November '25. How much sale we can -- company can achieve on the sale of energy, the 60-megawatt power plant? It is thermal power plant, I think.

Correct. It's a thermal power plant IPP. I think in terms of sales, in fact, recently, we have secured a long-term PPA for a period of 5 years for the Orissa IPP. Basically, it's for the state of Tamil Nadu. And the PPA commences from Feb of 2026 and is on until 5 years thereafter.

Okay. How much revenue this power plant can generate 60 megawatts in terms of PPA?

See, this PPA is for 50 megawatts out of the 60 into two IPP in Odisha. And we expect the operation to cover at about 50-plus megawatts on an annualized basis.

What is the rate...

The rate is...

What is the rate at which we are selling the power, IPP [indiscernible] the power to the government.

No. As per the long-term PPA, which I had mentioned, the delivered rate is INR 5.95.

Okay. Now second question is, sir, regarding employee cost. In this quarter, there is a sharp jump in employee cost in quarter 2, it is INR 111 crores -- INR 111.6 crores against INR 65.77 crores. Is there is one-off in this employee cost or company started recognizing the expenses of the employees in the Zambia MCL?

So it has two components. One is the salary increases and the revisions that have happened in second quarter that is effective 1st of April. That is one. And second is we also do the fair valuation of the RSUs, which is done every quarter. So these are significantly the two entities, two components of the salary cost.

Sir, can we expect the similar expenses in the coming quarter?

Mr. Lodha, I think you can come back in line. Let's see others answer.

The next question is from the line of [ C.K. Bharathi ] as a shareholder.

Am I audible?

Yes.

So just what Mr. AM Lodha was asking, I would like to get the clarification about how this increase in selling wages has happened from INR 65 crores to INR 111 crores.

Sorry, your voice is not very clear. Could you repeat that?

Yes. Just what Mr. AM Lodha was asking, previous speaker, regarding employees benefit expenses, which has gone up from INR 65 crores to INR 111 crores. Please continue with your answers.

It was already explained in the previous...

No, no, it was not explained properly. It was not explained properly, I believe. You said there is two components. One is because of increment in the salary. Other is because of the revaluations or some fair value adjustment. Can you just quantify of -- both these? How much is towards increment and how much is towards fair -- reinstatement of fair valuations?

Yes, we will get back.

So when I can expect the answer?

We will separately give it to you.

Maybe, Monday, we will -- yes.

And another question is just I wanted to know your dividend policy of Nava Global. I understand from your presentation that you have received $72.8 million from Maamba towards dividend. And how much you have distributed from Nava Global to Nava India dividend so far out of the $72.8 million?

So the dividend policy for Nava Global is adopted by the Board is 30% of PAT would be distributed as dividend. And as it stands right now, that's what we have followed. And therefore, Nava Global after receiving the dividend from MEL has declared $10 million to Nava.

And can you just enlighten us what are the uses of cash with Nava Global, how we are going to deploy those?

Sorry to interrupt, [ C.K. Bharathi ]. Please rejoin the queue as -- to ensure that management -- yes, please. [Operator Instructions] The next question is from the line of Abhinav Nalawade from ICICI Securities.

I understand the MEL 2 plant is going as per the planned commissioning. I just wanted to know what is the CapEx that was done in Q2? And what is the CapEx that is pending for this plant?

Total outlay is $400 million for Phase 2. And out of that, currently $226 million has been spent.

Understood. My second question is on Avocado plantation. It is mentioned that the first fruit yield and income is projected in second half FY '26. What are the earnings that we can expect from this?

Yes. So in terms of the Phase 2 coming on stream, it's going to be during the later part of next year.

The next question is from the line of [ Shikhar Tiwari, ] as an individual investor.

Am I audible?

Yes, you are audible.

My question is regarding that the company is now having a significant amount of cash flow on its balance sheet. So going forward, what is the policy of this management to utilize the cash flow? Are we going to invest in more businesses in Zambia? Or are we going to look for opportunities throughout Africa or India and invest in those profitable opportunities? And the second question is if there is any policy regarding the dividend distribution from this cash flow going forward?

Yes. So in terms of our growth plan, I don't think we are specific to any geography. As and where we see good opportunities, we evaluate the risk versus return, and if it makes sense for us, we will expand. Today, as it stands, if you look at our current projects that we have in the pipeline, we have a total equity commitment of approximately about $200 million, agri and in the energy sector. So -- but notwithstanding that, we have adopted a dividend policy at the Nava Global level that 30% of the PAT would be declared as dividend to its shareholders.

[Operator Instructions] The next question is from the line of [ C.K. Bharathi ] as an individual shareholder.

Yes, sir, the same question that what are the uses of Nava Global balance 70%, out of that 70%, 30% you are going to distribute as dividend. And what are the uses of that fund? You told that $200 million will be required for the expansion and balance what -- how they are going to use those funds?

No, I've explained this before, sir. I've very clearly stated that as funds come into -- I'm talking about the Nava Global level, 30% of them will be declared as a dividend based on the dividend policy. And the remainder will be used for expansions and growth capital. And today, as we stand, we have approximately about $200 million of equity commitments. And apart from this, we're always looking at new opportunities too. So that's the utilization of the funds.

[Operator Instructions] The next question is from the line of [ Prabhakar from RTP Securities. ]

Sir, I have two questions. One is what is the status of the mining exploration? And second thing, last time you said that you have been appointed a consultant with regard to the Nacharam land, how it can be utilized? And what is the outcome of that report and what we are going to plan with that land? And another thing, is there any proposal of giving the bonus out of the existing reserves to the shareholders?

Okay. I think -- sorry, in terms of your first question, with regards to exploration, which exploration are you talking about? There's lithium and there's also the manganese exploration in Ivory Coast?

Yes. This government has been allotted the rest of land for us for the exploration of mining. This, I think, other than [ the Maamba, ] Zambia.

I think in both geographies in Zambia as well as Cote d’Ivoire, the exploration works are underway -- are still underway. And I think once we have some concrete information out of that, we'll report it.

It will take how much time can I expect, sir? How much time...

I can't put a number on it, but we expect to have some news by the end of next year.