Thank you, [Shailesh?] .

Good morning, everyone. On behalf of Systematix, we welcome you to the Q1 FY27 earnings conference call of NALCO Limited.

I would like to thank the management for giving us the opportunity to host this call, and I now hand over to Mr. Bharat Sahu, Company Secretary, NALCO, to discuss the company's financial and operational performance.

Over to you, sir.

Namaste. Good morning.

Warm greetings from NALCO, Navratna CPSE under Ministry of Mines. Let me at the outset introduce our functional directors sitting in this earning call.

In the middle is our CMD, Shri Brijendra Pratap Singh.

Good morning.

Sitting next to him is Director (Finance), Shri Abhay Kumar Behuria.

Namaskar.

Sitting next to him is Dr. Tapas Kumar Pattanayak, our Director (HR).

Good morning to all.

Sitting next to me is our Director (Production), Shri Pankaj Kumar Sharma, sir. I am Bharat Sahu, the Company Secretary and Compliance Officer.

On 31st July evening, NALCO board considered and approved the financial results for the first quarter of FY27. NALCO had already registered a robust performance in the Q1.

The one presentation is already uploaded in the website of the stock exchanges, also on the website of the company. It is a robust performance, and I will request our CMD, sir, just to highlight the key financials of this Q1, and then we'll start taking the questions from your side, please.

Good morning. At the outset, our performance for the Q1, already the presentation is loaded, but I would like to give few highlights of the Q1 performance.

Q1, our overall total income, which grew if we compare to previous year Q1 from ₹3,930 crore to ₹5,400 crore, around 39% growth, Q1 to Q1, same if you see CPLY. Earnings, if we see, PBT grew by around 88%, EBITDA grew by around 78%.

There has been a substantial growth both in revenue collection, both in profitability of the company. If you see the highlights of the performance, physical performance also has been very good.

Whatever targets we have set in the beginning of the year, almost all targets we have achieved. We have achieved best ever production in bauxite, in hydrate production, and wind power and in power generation as far as quarter one progress is concerned, best quarter one in all these areas.

Financially, if you see, best quarter performance we have done as far as our revenue generation is concerned. It's the ever best quarter we have done.

As far as profitability is concerned, best Q1 profitability we have achieved. The major contributors have been, of course, our internal if you see improvement in the volumes of production.

Whatever targets we have taken, almost we have reached to the peak of the volume in all the areas. If we see refinery, if you see our metal production, all the areas, and we have targeted at least 5% to 10% more than the capacity utilization, whatever we are going to do, more than the rated capacity we have targeted this year.

As far as other areas are concerned, we are also targeting to reduce our cost, increase our efficiencies, which is in our hand, that is increasing volumes and reducing the cost. We have also going for some value-added products for future expansions.

As far as expansion is concerned, 5th stream refinery is going to come this year. Also, we are targeting to expand our smelter capacity, for which we are going for DPR making, going ahead with the various milestones which we will be discussing in the presentation.

Once again, thank you, Systematix Group, for organizing this conference call. Yes.

Ma'am, over to you. We can now request all our esteemed participants to come forward with their questions.

Thank you

how is the commissioning process moving there, and can we still produce 300,000 tonnes in the current fiscal?

Our 5th stream refinery, June onwards, we have started pre-commissioning activities, few of the packages. Almost around 50, more than 50 packages are there.

Few of the packages mechanical completion already has been done, and the trial of those packages are under process. Few of the packages are left out.

Our target is by September end, we have to complete mechanical completion of all these packages, do the integrated trial first, that is the water run is to be done within the packages, and after that, we'll start the actual production process, which will take maybe 3 to 4 months to stabilize and reach to the level of 60%, 70%. This year, our target was that we'll be producing around 2 lakh tonnes of alumina from this refinery.

Even if we start the actual production from November, December onwards, after that also, we'll be able to achieve those kinds of figures from the 5th stream refinery, that is around 2 lakh tonnes of alumina production.

Right. Why has there been a delay?

Because earlier, we were planning to start producing from June onwards. As we are seeing around 6 months of a delay, any reason around it?

We were planning to start the commissioning activity from June onwards and after that complete it in next 3 to 4 months. Of course, the mechanical completion, which was supposed to be done by June, July, maybe getting delayed by 2, 3 months.

This is a big project. Big project, it is very difficult to exactly pinpoint the date of commissioning and all that, and it's a chemical process plant.

Now, maybe by September end, we are targeting ki mechanical completion will be there and will start. There is almost 2, 3 months delay is there, not very huge delay is there.

Sure. Okay.

My second question is on employee cost, which has gone down below ₹1,600 crore if we annualize Q1 number of ₹395 crore. Is it part of the superannuation plan that you guided in Q3 FY26 that you were going to affect senior people of around 200, 250 with the cost saving of ₹70 to ₹80 crore?

Is it same which is coming now?

Good morning. Myself, Abhay Behuria, Director (Finance).

It's a right question, why our employee cost is going down. If you see the CTC of our last year 2025-'26, our average CTC was around ₹36 lakh.

If this quarter, it is around ₹33 lakh. There is a reduction of ₹3 lakh almost.

That is because, rightly you have said, that is because of superannuated of the high-paid employees and induction of the employees at the entry level. That is the one reason.

Second reason is we have made some provisions last year towards retirement benefits, that is provision towards actuarial valuation of leave, gratuity, and which was on the higher side. This quarter, we need not to provide that.

Another area is PRP. PRP, we have made a provision last year, which is not required to provide this year in that ratio.

That has reduced our cost. We expect that this trend will continue in the next three quarter also.

Okay. For the full year, we can still see this number around ₹1,600 crore.

That is

right? Right.

In the latter part of the year, in the last quarter, quarter four, there may be some impact of pay revision because 1st January 2027 pay revision is due. The last quarter, there may be some increase in 15% additional.

Otherwise, two quarter, second and third, the cost will be in this line only.

Understood. Thank you so much.

My question is with respect to our alumina sales volume. For FY27, you have guided 25 lakh tonnes of alumina production.

Anything in terms of sales volume? Because that number fluctuates a lot.

If you can guide on the full-year volumes for FY27.

This financial year, last year, we sold around 14 lakh tonnes of alumina. This year, we are targeting 16 lakhs.

Whatever 2 lakhs extra alumina we are trying to produce from 5th stream, that will be added to our sales volume. So 2 lakhs extra will be selling this year.

Understood. The second part is we have seen now that the aluminium prices have come down.

Going forward in Q2, do you foresee any raw material cost pressure which will persist? Because in the earlier quarter, you guided that there is some cost inflation on CP coke, coal, tar, pitch, and other raw materials.

Will it impact our margins going forward as the aluminium prices have cooled down?

Aluminium prices, you see, in the first quarter, average we got around $3,500, $3,600, or $3,700 of LME. Now it has come down to around $3,200.

Raw material prices, of course, has increased. You see caustic soda prices, last year average was around ₹42,000.

In Q1, our expenditure was around ₹45,000 per tonne, and Q2, it will become around ₹49,000. Of course, caustic soda prices are going to go up by around ₹3,000 by ₹3,000 to ₹4,000 as compared to Q1.

CP coke prices also has gone up. ₹53,000 was ₹44,000 was last year.

It has gone to ₹66,000 to ₹70,000. These are the two major areas.

Also, HFO price, which was ₹46,000 last year, it has gone up to ₹75,000. This has increased our overall cost of production by around ₹15,000 to ₹16,000 per tonne of metal.

These three areas, caustic soda, CP coke, and HFO, these are the three areas and also aluminium fluoride by some amount. Of course, around 10% to 15% increase in the raw material prices are there, which is increasing our cost by around ₹15,000 to ₹16,000, metal prices.

Anything which can offset that? Means we have seen just recently alumina prices have increased to $350 per tonne.

Then is there any scope to offset that with lower coal power cost, or you think that the margins could take slight hit?

Alumina prices, what we what we expected in the beginning of the month year was around $310 to $320, but of late, we are getting around $370, alumina prices. That is because in Russia also, Rusal, and China, two of the refineries due to red mud issues, they have they have reduced the production.

The bauxite prices in New Guinea has increased slightly. That's why the alumina prices, which we were expecting that it will be somewhere around $320, we are getting around $370.

That will offset somewhat raw material what is increased in the raw material cost. Because raw material had given us an expenditure burden in Q1 of around ₹120 crore,

na? ₹200 crore,

₹230 crore extra due to raw material increase in the raw material prices. Alumina prices are the prices which we are expecting it will if we remain at the level of $370, then that will offset the input raw material cost.

Understood, sir. That's it from my side.

Thank you very much, sir, for this opportunity. Sir, I have a few questions.

The first is, you highlighted $370 per tonne is your alumina realization you're getting currently. What was the alumina realization you got in Q1, sir?

Just

can you repeat the question? Just last line.

The alumina realization in Q1, quarter one.

Q1? Q1, our average realization was around $323, alumina.

Yeah.

Quarter one cost of alumina, sir? Cost of higher or flat?

Little louder. We are not able to.

Voice is cracking. Not very clear.

One second. Alumina cost of production, sir, will it be higher in quarter two versus quarter one?

Quarter one, our cost of production if you see, you are talking about alumina or metal?

Alumina. Our alumina cost normally ranged between ₹21,000 to ₹22,000.

Last quarter, it is around within that range only. The second quarter, since we have observed all the input cost increase in the first quarter, and similar pattern of cost price will be remain in the next quarter, we don't think our cost will be increased.

Rather, our cost will be within that range only, around ₹21,000 to ₹22,000 per tonne of alumina. Rather, we will be getting advantage in the price because CMD, sir, has already explained that the next quarter, we are going to get an incremental price of around $50 from alumina.

Got it, sir. My second question is, sir, you highlighted metal cost of production increase of ₹15,000 to ₹16,000 a tonne.

Was that cost of production increase already seen in quarter one, or will that increase come in quarter two versus quarter one?

No, it was already expected because we are knowing that raw material prices are going to go up, these three raw materials, that is caustic soda, HFO, and CP coke. That was almost expected, and the similar kind of cost will continue in Q2 also.

Okay. Similar kind of cost will continue.

Got it, sir. Sir, my third question is you highlighted LME prices, which have moved.

Now how are the domestic aluminium premiums, because you had highlighted previously that they change with a lag? Have they increased in recent times, or you see the premiums increasing in the domestic sales?

Premium has increased. Our earlier premium was around $60.

Now it has gone up to we did the tender last around $110, $110. Premium has increased by around $50.

Got it. Do you expect this to increase further, sir, the domestic?

No, no. That premium increase was due to that war situation in the Middle East.

Now since the war situation is easing out, we are expecting that it may remain same or maybe it may go down also.

Got it, sir. Sir, my last question is because of the war situation in the Middle East, were any of your export shipments impacted, which will now normalize either in alumina or aluminium?

Yeah. Few of the shipments, like one shipment was earlier ordered, of course, that was before the war, which was ordered at $390 also.

That has got materialized. We are getting better realization in that.

As far as other shipments are concerned, other shipments, whatever is getting ordered, they are going. No other pending shipments are there.

Got it. Thank you very much, sir.

Thank you.

Good morning, sir, and thank you for the opportunity. Sir, 2Q usually being a monsoon season had traditionally been weaker, especially on the coal import side.

Just wanted to understand, had we have sufficient coal inventory including the captive this time, and any one-off cost in escalation or any disruption we have experienced so far?

As far as our power plant is concerned here in Angul, that is for our smelter, there we are having sufficient coal because that coal we are getting from our captive source. Around 60%, 70% of coal we are getting from the captive source.

Their issues are not there. Of course, in our refineries, the coal stock is on the lower side.

Coal stock, we have to maintain at the level of maybe 10 to 15 days. Now it is around 2 to 3 days.

That is because of the restriction given by the government, the priority of the rakes. There we are heavily dependent on the rakes from the railways, and the priority is given to the power plant.

There, some issues are there. We are taking it very aggressively with the Indian Railways and our ministry, and some improvement is there.

Since now the summer is over, restrictions will come down. We are expecting that the stocks will also improve in the coming days.

As long as the rake availability for the shipment is concerned, there's no problem so far?

No, for that shipment, our own rakes are there for the dispatching calcined alumina. For that, no issues are there.

We have got our own BTAP rakes. For that, no issues are there.

Got it, sir. Sir, my second question pertains to we keep hearing about embarking on a half a million tonne aluminium plant capex.

Is it better?

Yeah. Sir, second question pertains to we keep hearing about our half a million tonne aluminium plant capex.

Could you give us some highlight at what stage of board approval these plans are, when we will start on this, and the capex, any?

For this 0.5 million tonne smelter plant, developments as of date if you see, we have already got technology supplier finalized, that is EGA, EGA. We are going to sign technology license with them maybe this month by 10th or 15th.

DPR making is under process. The consultant is making the DPR.

Our target is next 3 to 4 months, we will be ready with the DPR and get the board approval maybe October, November for the DPR for setting up this 0.5 million tonne smelter and also 1,000-megawatt power plant. After that, maybe we'll take 8 to 9 months to order the packages.

By next year, August, September, we should order all the packages and start the groundwork maybe next year, October, November. From there, it will take 3 to 3.5 years to set up this plant.

The timelines which we have given to the ministry and our internal timeline is by December 2030, we have to complete this plant along with the power plant. As far as the power plant is concerned, power plant, we have done one JV agreement with NLC for setting up this power plant so as to reduce our capex and to have the raw material security, that is the coal.

NLC is having the coal mines here itself in Talcher district. The coal supply will be from there.

That will be good for this power plant. This power plant DPR is also under process.

At the same time, both will get ordered and get commissioned by 2030 end or '31 first half. Capex is concerned, the overall capex expenditure will be somewhere around ₹25,000 crore.

This will start from financial year '27-'28. The peak will be '28-'29 and '29-'30 and '30-'31.

This will be the 2, 3 years where this capex flow distribution will be there. This year, for that project, no major capex will be there.

Of course, technology licenses, we have to give something, maybe ₹300, ₹400 crore. The major capex will be coming next financial year onwards.

Noted, sir. Sir, just one clarification.

The shipments or the exports which we do to Russia, is it on a dollar-denominated or is in the Russian currency? Whatever the dollar-denominated sales we do in the export market, we book the dollar rate to rupee at the time of shipment, right?

No, whatever shipment our exports are going, that is on a dollar basis at the time of ordering. When our tender is floated, we do the spot tenders, and that is the dollar rate as of that date.

Then the booking happens or the sales got booked at the time of shipment, right?

Booking, actually we do the spot tenders, and the date of opening the spot tender, at that date, whatever the dollar prices are there, that is finalized.

Noted, sir. Noted.

Understood. Thank you, sir, and all the best for future.

Thank you.

Hi. Good morning.

Thank you so much for the opportunity. Sir, my first question comes on the captive coal mines.

We were targeting a 4.8 million tonne production for FY27. Can you just elaborate on where we are in the EC process for our mine expansion?

Already, the mining plan approval we have done. For mining plan approval is to be done from the board.

This board, we have done the mining plan approval. Now we are applying for the EC.

Next maybe 2, 3 months, we'll be getting the EC. Already we have started the production, and 4.8 million tonne, we are sure we are going at the rate of 4.8 million tonne, monthly breakup whatever we have done.

Next 2, 3 months, we'll be getting EC from MOEFCC. There are no major issues in that.

Oh, okay. That's good to hear.

Could you just give me what was our total coal production in Q1 from our captive mines?

Q1 was 11.04 lakh tonnes.

11.04

Because initially, what happened, initially 4, 5 days in the beginning of Q1, 5 days, the production from the mines were not there. There were some technical issues.

Now we have ramped up the production, and the subsequent quarters, we'll be managing those whatever shortfalls were there.

Oh, okay. Okay.

Can you just repeat the number once more, sir?

11.04 lakh tonnes.

11.04. Okay.

Sure. Sir, my second question is, now the Pottangi mines, we have already appointed an MDO.

When do we see the production to take place, or is it already started?

Pottangi mines, actually one we have already ordered the MDO. For going to the mines and starting the production, one road is to be made, 8-kilometer road.

For making the road, tree cutting is to be done. We have, along with district authorities, some resistance is coming there.

Some activists and some resistance are coming there. District authorities, 2, 3 times we have tried along with the state government, police force, and all that.

We are trying to mobilize the locals there along with the MDO. I think in the this month, this month itself, that is in the month of August, along with the authorities, we will be again going there with for making the road.

Once the road making will take around maybe 15, 20 days. That way, we are targeting maybe September, October onwards, October onwards, we'll start the production.

Oh,

okay. Sure.

Sure. That is quite helpful, sir.

One last question I had. As of March 2026, our total employee count was roughly 4,880.

What would the employee count be as of right now or as of Q1 end?

4,848.

4,848.

As of now, it is 4,848.

Okay. There could be another 150 to 150 to 170 employee reduction more by the year-end, right?

Yes. Every year, we'll be reducing around 200.

170 to 200 every year reduction will be there in coming 3, 4 years.

Sure. Sure, sir.

That is quite helpful. All the very best.

Thank you.

Yeah. Hi.

Thanks for the opportunity, sir. You mentioned the mechanical completion of the alumina plant in September and roughly additional 200 kt production, right, sir?

Next year then, can we assume the full run rate of this capacity?

Yes, yes. Next year onwards, we have to do.

We will be going to 1 million tonne production from there and 2.2 already we are 2.2, 2.3 we are doing from the existing. Maybe we'll be going to 3.1, 3.2 next year onwards.

Sure. Also on this local market premium for aluminium, how does it really work?

You enter into some contracts once the premium is fixed, or is it goes with the spot market itself?

Actually, we do export tender. From export tender, we get the export premium.

That is loaded on the domestic pricing, whatever we do. That is loaded on the domestic pricing, LME.

Domestic pricing is based on the LME. No, no, I know.

Talking about the premium.

When you sell in the local market, the premium that you book or charge customers in the local market is also based on some benchmark, let's say MJP benchmark or something like that, or you fix it?

It is not on the MJP. What process we follow is we do one export tender.

In export tender, whatever premium we do get, that premium is fixed for next 3 to 4 months unless and until we do the next export tender. Suppose we did a export tender last month, we got a premium of $110.

That premium will be loaded on the domestic pricing for next 3 to 4 months until we do the next export tender and we discover the premium.

Okay. Okay.

You are talking about the metal price or alumina?

Aluminium, the sales that you make locally.

That is our policy, what CMD, sir, has explained. We have a structured policy for fixing the aluminium price.

There are other factors are also there. One factor is premium.

Whatever premium is discovered through tender in export tendering, that is added to our aluminium price domestic supply. Okay?

Sure. Sure.

Got it, sir. It's revised based on every tender that you do.

Every tender, yes. The frequency of tender between 3, 4 months.

We do normally.

Right. Also, what is the capex outlook now for FY27, '28 if you could provide the numbers?

Our target is ₹1,500 crore. Maybe we'll be crossing that.

We'll be somewhere ending up with around '26-'27 you are talking, na?

This year as well as next year.

This year, our target is around ₹1,500 because most of the payments for 5th stream is done. Major capital expenditure is not there, but still we'll be doing somewhere around ₹1,500 to ₹1,700 or ₹1,800 crore.

Next year onwards, it will increase because our expansion of the smelter will be there. Next year, how much we have planned?

Next year, we have planned around

₹2,500, ₹2,500. ₹2,500 maybe in '27-'28.

After that, it will go to maybe ₹4,000, ₹5,000 crore. After next year, maybe ₹6,000, ₹7,000 crore.

We have done the phasing. The major expenditure will come from this smelter expansion and power plant expansion.

Sure. Got it.

Also, captive coal, I think earlier you had mentioned about 4.6 odd million tonnes of production this year. You seem to be on track on that?

Yes, yes. Captive coal, last year we did 4 million tonnes.

This year, we are targeting 4.8 million tonnes. Because 20% increase is allowed.

For that, all permissions and all that under process. On a monthly basis, we are producing at the rate of 4.8 million tonnes, and we'll be achieving that at the end of the year.

Sure. Sure.

That's it from me. Thank you.

Good morning. Thanks.

Just continuing on the previous question. One on the capex, can you share 1Q how much we spent?

Then for the expansion, I just want to know, the power capex will happen in the JV, will we be contributing only to the amount of equity, which could be maybe around 20%, 30%? Just if you can explain how the power expansion capex will happen.

Yes. Our capex plan, what CMD, sir, has already explained, smelter, we are going to do EPC mode, and for power plant, we have JV with NLC, and we'll be going both.

Okay? The contribution to our total expenditure towards our capex for up to 2030, '31 will be around ₹24,000 crore, ₹17,000, ₹18,000 crore on smelter and ₹6,000 crore towards contribution for this power plant, 1,080-megawatt power plant through JV mode.

Total cost will be around ₹12,000 crore, and ₹6,000 crore from our side and ₹6,000 crore from NLC because 50-50 JV is there. In power plant, we have a debt-equity ratio of 30:70.

If you follow that, our equity contribution will be lower. It is around ₹3,500, our share will be 1,760, and balance will be financed through bank.

NALCO and NLC will be the guarantor because this is the new JV, will be the guarantor, and the money will be taken from the bank. If you see otherwise, if you see our fund base, if you see our balance sheet as on date, we have a fund base of around ₹10,500 crore cash.

Every year, we are adding ₹3,500 after paying our dividend and all our capex expenditure regular. If you see that area, we need not to take any money from the outside because we have sufficient balance.

Since we have entered into agreement of JV agreement for power plant, the power plant will be financed by that company, JV company. Equity participation will be 30%, 70% will be taken from the bank.

Balance money which we have will be utilizing for our expansion project of smelter. Other project, we are also considering, that will be entirely through equity because we have sufficient balance.

The power plant will be 70:30, 30 equity base, debt-equity is 30:70. That is the present proposition, and we are going to go by this philosophy.

Understood. Sir, for the power plant, ₹12,000 crore for 1,000 megawatt, generally, the thumb rule is ₹7, ₹8 crore per megawatt.

Why is the cost so higher?

1 megawatt, I think ₹10 crore 1 megawatt. It will be ₹10,000 to ₹11,000 crore.

It is not higher because we are going to set up a 1,080-megawatt power plant.

Okay. Understood.

Sir, what you said with the cash balance as on 1Q, net cash ₹10,500?

Yes. As on 30th June 2026, as on date, it is ₹10,500-plus.

Understood. In 1Q, how much did we spend for capex?

This year, or you're talking about the subsequent?

Only in the first quarter,

we have spent, I think, ₹350.

Understood. Understood.

Sir, I wanted to understand that on the previous question on sales of metal, you shared the premium is decided as per the export tender. The domestic price, just to clarify, it is the LME plus the customs duty plus whatever we get as a premium in the export.

Are these three components there?

There are some handling charges and some stockyard charges, something are also added on that basis. The transportation charges.

Transportation charges. From port to our A point and the port to the customer point, because we have a calculation module.

The three factor is there. You have rightly mentioned, that is the export import duty plus premium plus handling charges and plus freight equalization.

What freight customer have paid to their location, what they will be paying from our location to their

stockyard. Understood, sir.

Can you share what were these three components for 1Q? LME, we know, but the break-up of the realization, we

That is available in our domain. You can get it from our website.

I think pricing policy is there. That policy, we need to see whether it is a classified one or not, we can share or not.

Okay. That's fine.

Sir, just one last thing. On the aluminium metal, you said ₹15,000 to ₹16,000 increase in cost.

This is

₹15,000.

Yeah, ₹15,000 to ₹16,000. This is with respect to fourth quarter or with respect to last year as an average?

Last year average. Last year average was ₹156, ₹157 around, ₹157,000.

This year average, first Q1 is around ₹170,000.

As per the today's trend, 2Q should be what, sir?

2Q will slightly increase because CP coke prices and caustic soda in Q2 will be slightly higher, not much higher. Maybe it will go to ₹172 or ₹171, ₹172.

Depends on how much efficiency we are achieving.

Understood. Just one last question, sir.

When we are adding around less than a million tonnes of captive coal this year, what is the cost saving? What is the difference between the cost of captive coal versus what we are replacing, linkage or e-auction coal?

Our cost of captive coal which we are sourcing from our own mines, landed cost is ₹1,600 per tonne. If you compare this cost with there are two type of coal we are taking from the Coal India.

One is agreement, FSA, linkage, fuel supply agreement, another is through auction. The FSA coal is around almost same range, ₹1,700, ₹1,600, ₹1,700.

If you see that auction coal, it is varying from ₹3,500 to ₹3,600. There is a difference in auction coal.

If you see the FSA coal, we are not regularly getting because of the rake supply. The auction coal is too high than our captive coal.

There is a great advantage between auction coal and our captive coal. Okay?

That is ₹1,500 almost.

Okay. Sir, last year, what is the break-up of our coal?

How much was linkage and how much was e-auction?

Last year, if you see, linkage

Linkage and e-auction.

Linkage and e-auction. Around 55, 45.

Linkage and e-auction.

Yeah. Linkage and e-auction.

We are talking about Because Out

of total 7.2 million, 4 million is our own. We are taking 3.2 from Coal India.

Out of 3.2, linkage and e-auction kitna hoga? Linkage?

Linkage was around 34 million, 30 lakhs from our CPP and 10 lakhs from refinery, linkage. Auction coal, it was around 1 million, 1 lakh.

10 lakhs. Just we'll check up the data and let you know.

Sure, sir. That was my last question.

I'll wait for the answer, and I'll join back the queue. Thank you.

Thank you, sir.

Hi, thank you for the opportunity. Sir, just two questions I had.

One was on the aluminium metal price outlook. Because the Middle East war destroyed one or two big production factories, when they come back on stream, what happened?

What is your expectation of aluminium metal prices? That's number one.

Number two is that in recycled aluminium also, India is seeing a lot of investments. Does NALCO have any plans?

Can that impact our sales going forward 2, 3 years later? These are the two questions.

Metal prices as of now, it is $3,200. LME is 3,200.

What forecasts are telling, CRU and Platts and all that, that remaining part of the year, that will remain somewhere around $3,100, $3,200. We are also expecting ki somewhere in between $3,000 to $3,200 will be the LME in the remaining part of the year.

Because whatever smelters are supposed to come in the Middle East, that will be coming maybe at the Q4 of this financial year. Because this smelter will take some time more, 6, 7 months, 8 months more.

Supply restrictions, the projections are there, there will be a deficit of around 0.88 million tonnes of metal in the international market. If you see the production and consumption pattern, there is a deficit of around 0.88 million tonnes.

LME will be there somewhere around $3,200.

Got it, sir. Got it.

As far as recycling is concerned, you're talking about recycling, as far as NALCO is concerned, recycling basically is done for the secondary producers who are making small, small quantity. Since we are a major producer, we don't go into recycling because that also disturbs the quality of the metal we produce.

In aluminium sector, the quality of the metal is very important, the purity of the aluminium. Whenever the recycling is done, the quality assurance is not there.

Our plans for recycling is not there. Okay.

Sir.

Okay. Thank you so much.

Thank you.

Hi. Hi, sir.

Thanks for taking my question. My first question is that for this quarter, did we have any LME-linked contracts for alumina?

If yes, then how do we stand for the quarters ahead of us?

Just we could not get you. If you can repeat your question.

Yes, sir. My question is, did we have any LME-linked contracts for alumina for 1Q FY27?

If yes, then how do we stand for the quarters ahead of us?

Term contract in Q1, I think in the beginning, one or two shipments were there. We have to see it.

Now, as of now, last 2, 3 months, 2 months, we are not having any. That we call as a term contract, which is linked to the LME.

That is not there because we had few tenders in which the percentage was very low. It was coming around 10% of the LME.

That's why we cancelled that tender. Because spot prices, we are getting better.

Is it fair to say that for FY27 also for the remaining of the year, we won't be having any term contracts?

Actually, we go for the tender. We will be doing some tender.

If we get the better prices, then only we'll go. Because as of now, if we are getting $370 and the percentage wise if we get only 10%, 11%, around $3,200 LME, that will come to maybe around $320.

We don't order that. It totally depends on we'll be doing tender if we get the better prices around 12%, 13%, 14%, then only we'll book the order.

Can you, sir, also explain how we are getting this $50 of premium versus our 1Q average, which you said was around $320 for alumina, and now for this quarter, you are expecting it to be $370? Why this differential is there?

Whatever premium I was talking, that was for metal, aluminium. Alumina, whatever we are selling, that is a spot tender, fixed price.

Suppose we are doing a spot tender, and on that spot tender, whatever suppose we are getting $370 per tonne or $350, whatever, that is a fixed-price spot tender for shipment. That premium I was talking was for the metal, for aluminium, whatever aluminium we are selling in the domestic market.

On that, we load some premium. That depends on whatever export, we do some export of the aluminium also.

Some metal exports also we do. We do 500,000 tonnes every month.

In that export tender, whatever premium we are getting, that is loaded to the domestic customers. Sure.

Sure. Is it fair to say that for second quarter, alumina's realizations could be close to $360, $370 for NALCO?

Yes, yes. Already this month, July, we have spot tenders.

August spot tender also somewhere around $370, we are getting. Last spot tender, we have done 2, 3 batch, that also we got $380.

Q2 average $370, I think we'll be getting Q2.

Now

what we have mentioned, the first quarter realization was around $323. The next quarter, we will be expecting $50 more.

That is through spot tendering, not term contract, whatever it is. We are expecting that.

Because the price trend what is now being prevailed, it will give us more $50 more that our earlier realization. Okay?

First quarter.

Got it. Got it.

My, sir, second question is on the bauxite to alumina production. For this quarter, we have used kind of 3.2 tonnes of bauxite for 1 tonne of alumina, which is efficient if we compare it to the last few quarters, which was at around 3.5 tonnes of bauxite.

Any particular reason for this improvement, and can we expect this to sustain ahead also?

It totally depends on the quality of bauxite we are getting from the mines. Basically, we have started a few new faces in our mines.

When the quality of bauxite is good, per tonne consumption of bauxite it goes down. In the coming days, because we are going to start south block 2 also, where we'll be getting better quality of bauxite.

Now our north block, which was the very old block, that has almost exhausted. We are starting some new faces where the bauxite quality will be better.

Average specific consumption of bauxite will be getting better.

Sure, sir. Thank you so much.

That's it from my end.

One query was there on the linkage coal and all that. Our Director (Production) is there.

He's going to answer that query.

Basically, for our CPP, we are utilizing linkage coal and Utkal D and E coal. Last year, we have utilized 47.16 lakh coal from linkage through MCL and Utkal D and E 40 lakh tonnes.

We are taking coal through e-auction for our alumina refinery. Through linkage, last year we purchased 11.24 lakh tonne through linkage and e-auction coal around 7 lakh.

Approximately 40% coal of total coal used in refinery is purchased through e-auction and balance is through linkage. Thank you.

Hi, sir. Thank you for the opportunity.

I just wanted clarity on one of the points

Yeah. Am I audible now?

Is it better?

Good morning. Yeah.

Good morning, sir. You had mentioned about this premiums for metal at around $110 currently.

Can you tell us what was it in the last time when you had done the revision and what is the impact between then and now?

That was last time we have done around 5, 6 months back. At that time, we got the premium was around $60, na?

$60. Somewhere around $60.

Okay. Based on what you're saying, your premium has only increased, but I think in your presentation, you had mentioned something like premiums are declining or premiums are likely to reduce, war risk premium.

Can you tell me the difference between the two?

You see, the premium totally depends on the demand-supply. If the demand is more, the supply is lesser, the premium we get better.

Now last time when the tender we did, at that time, the supply restrictions were there due to this war situation. Since the war situations are easing out, even the smelters in the Middle East, they are trying to improve the production.

In the subsequent months, when this eases out, the premium will go down. Okay.

Got it, sir. Just one question.

Your new alumina refinery that you are starting, what will be the difference in terms of cost of production versus your current plants, because the current plants are much older, right?

Cost of production in the expansion unit, you're talking?

Correct.

We have calculated for our expansion unit 5th stream, the cost of production will not be much high because if you see our current cost of production of alumina, this last year, it was around ₹20,000, but this year, first quarter, we have got around ₹22,766 because of the increase in caustic soda and fuel oil, that is HFO. These are the two major contributors that has increased.

In our new refineries, that is a 5th stream refinery, the advantage which we will be getting is that is a pressure digestion, where the caustic soda consumption will be on the lower side. The caustic soda consumption in our existing refinery, which is around 103 kg to 105 kg per tonne of alumina production, that should go down to around maybe 85 to 90 kg per tonne of alumina consumption.

That will reduce our cost by maybe I think by ₹1,000 or ₹1,500 per tonne as far as alumina cost is concerned. Other areas like manpower cost and all that, because that is a big unit, one line producing around 1 million tonne.

Now from four lines in the existing refinery, we are producing 2.1 million tonnes. The fixed cost, that is a manpower cost, will also be on the lower side.

Of course, the interest is not there, the depreciation will be loaded. Some depreciation will be loaded on the cost.

What we have calculated, the overall cost of the existing refinery and the new refinery will be almost same. New refinery also come around ₹22,000, ₹23,000 will be the cost coming.

Got it, sir. Thank you, sir.

Thank you.

Sir, I just have one question, just a clarification. Our current alumina capacity is 2.1 million tonnes, right?

Yes, yes.

Sir, after expansion, how much is this going to become?

You see, our current capacity is 2.1, but last year, we produced around 2.3. We have done 0.2 excess of our capacity.

With expansion, one more 1 million tonne will be added. After expansion, we are targeting the rated capacity will be 3.1 million tonnes, but we'll be targeting around maybe 3.2 or 3.3 million tonnes.

Sir, this comes up when, this extra 1 million tonne capacity?

1 million tonne, this year only 0.2 million tonne will be added. From next year onwards, that is '27-'28.

Okay. '27-'28, we will have full 3.1 million tonnes.

Yes, yes. Then

obviously as of now, we are selling what, closer to 1 million, right?

Last year, we sold around 1.4 million, 14 lakh tonnes. This year, we are planning 1.6.

After this goes to the full capacity, because in our smelter, we require only 0.9, 0.95 million tonnes. The rest has to be sold in the open market.

Next year, we'll get extra 1 million tonne. Meaning full Okay.

That has to be sold.

Sir. Thank you.

That's all from my side. Sir, one more

Yes.

What was the cost of this 1 million tonne new refinery?

Around ₹5,600 crore.

Okay. Fine, sir.

Thank you. That's all from my side.

This is all through internal accrual, right?

It was internal accrual. No interest will be loaded.

Depreciation only will be there.

Okay. Thank you.

Thank you so much.

Thank you.

Yes, sir. Good morning, and thanks for the opportunity.

Sir, I had a few questions on the bauxite, alumina part. On the existing bauxite mines at Panchpatmali, what is the balance life of the Panchpatmali mines and what is the reserve there?

Pottangi mines, what are you producing right now and what is the capacity can go up to next year?

Basically, at our Panchpatmali bauxite mine, we are having a reserve of around 110 million tonne. In addition to that, we have acquired new mine, which is also having around 110, 120 million tonne.

If we take the present rate of this thing, 85 lakh tonne around 8 8 million tonne per year if we take, we can say that the balance life of our Panchpatmali bauxite mine will be approximately 15 to 20 years.

Okay. I understand the Pottangi mines, the bauxite quality is better, due to which the cost of production for the new alumina expansion is going to be lower.

Is that correct?

Please repeat.

I'm saying the quality of bauxite which is going to be mined from the Pottangi mines is going to be incrementally positive for the cost of alumina production going forward. Is that correct?

I think basically,

the quality of bauxite at Pottangi mine, we will come to know after detailed exploration and all, after development of mines. At this point of time, we cannot be 100% sure that we will be getting that advantage.

Okay. Then how are you assuming that the caustic soda requirement for the new expansion will be lower?

Is based on the plant specification, not on the bauxite, is it? The caustic soda

Basically, for for this year for this year, we will be feeding bauxite from our exist existing mine to the new 5th stream. Once the production of Pottangi bauxite mine starts, then only we will be we will using Pottangi mine bauxite.

This both bauxite, both will be mixed and proportionately will be used in our 5th stream as well as in old stream. Then

the cost of production is likely to fall further with the Pottangi mines being operational fully. Is that correct?

I think more or less, it will be same. Yes, because, you see, when the new mines are operated, the quality is better.

When the mines becomes older, we go deeper, the quality is deteriorating. This will be a new mine.

The quality will be getting better. In our new refinery, which is coming up with a pressure digestion with a new technology, there the caustic soda consumption advantage we'll be getting due to the new technology in the refinery.

Right. Thank you.

Sir, I wanted to ask on the alumina realization, one question. Because we track something on the LME, which is a different number from the one you get on the 370 because LME average for last quarter is 323, 25, but we've got 370.

Could you tell us which countries the broad break-up of the exports are and why is there a difference between the LME and your realization?

As far as you're talking about alumina, na?

Alumina, yes.

Alumina is not directly linked with the LME. It totally depends on the demand-supply of the alumina.

Now earlier, we used to get if you compare to LME, we are getting around 14%, 15%. Now it has come down to 10% 10% to 11%.

Most of our alumina are going to the Middle East as of now also. Around 60%, 70% of the alumina is going to Middle East by some route or other.

Few of the aluminas are also going to maybe Europe, some China, some shipments are going. Actually what is happening is the bauxite prices has gone up also slightly, New Guinea due to rains and all that.

In Rusal, Russia, and also China, two of the major refineries, they have curtailed the production of alumina because of the red mud issues there. Temporary supply restrictions are there, which has caused to the increase in alumina spot prices to the level of $370, $380, which we are seeing with easing out of this war situation and the requirement of alumina in the Middle East, it will continue to the same level.

Right. On the long term, the alumina prices will veer towards 14%, 15% of LME.

Is that a right assumption as the production comes back in aluminium? Is that a right assumption?

Not 14%, 15%, maybe 12%, 11%, 12% all because LME on the higher side. LME is around $3,200, $3,300.

Alumina if you see percentage wise, not go more than 11% to 12%.

Right, sir. Sir, my last question was on the net debt.

Did you mention that the net debt is ₹10,000 crore now?

Net debt?

Net net cash, net cash, sorry, net cash, ₹10,500.

That is a cash reserves. We are zero-debt company.

No, what is the net cash as on the balance sheet as of the first quarter? Cash minus net debt?

That is around ₹10,500.

That means that through the year, even after your dividend payments, you'll end up with a ₹15,000 crore kind of cash. Is that a correct number?

Cash flow, that is the capex.

If you see the balance cash flows for FY27 Just our Director (Finance) will explain you every year how much we will be adding in the cash.

No, no, we have a balance of ₹10,500 now. Every year, seeing our profitability and PAT, we are adding ₹3,500-plus because we are expecting earning a PAT of ₹6,000-plus.

This year also, we are projecting to earn ₹6,000-plus and next year onwards also. After paying our dividend and our normal capex expenditure around ₹1,500 crore, and non-cash item will be added to that PAT, we will be having ₹3,500-plus every year.

When our capex funding will be there, we'll have a sufficient cash reserve with hand, we can easily finance our requirement through our internal accruals only. Okay?

That capex on the smelter will be approximately what, ₹4,000, ₹5,000 crore per annum when it starts?

Yes, yes. Because

we have already explained that for a power plant, we have gone for a JV. The requirement of fund will be lesser there because that will be funded through debt-equity ratio, debt 30:70, 70:30.

The balance in our smelter part will be funding through our internal accruals only. We need not go to the market for borrowing for our smelter expansion, seeing our cash reserve and our future earning potential.

Sir, one last question if I could sneak in. The capacity of the aluminium right now is on the 960 pots we're operating is 4.6 lakh tonnes.

Is there a possibility of any brownfield kind of growth there, or is it limited to 4 lakh 60 only? Like in the case of alumina, you have from 2.1, you made it 2.3.

Although we are having capacity of 4.6 lakh tonne, last year, we have produced around 4.72. This year also, we are expecting we will be producing around 4.76, 4.77 lakh tonne.

Realistically, you can go up slightly more. We are operating as on date, we are operating around 958, 959 pots.

Okay. Realistically, you can go to 4.75 kind of number totally in aluminium?

Yes, yes, 4.75 we are

Yes. Thank you so much for taking my question.

Thank you, Mr. Shailendra.

On behalf of NALCO, I thank all the esteemed participants who took out their valuable time and participated in this earning call of NALCO. This shows your keen interest in the business activities of NALCO.

Also in the future, we expect similar kind of cooperation from your side. Thank you, Chorus team, for facilitating this post-earning call for this Q1 results of NALCO.

I also thanks Systematix Group for continuously hosting this post-earning call of NALCO on quarterly basis. We solicit similar kind of cooperation in future also.

Thanks. Thank you all.

Thank you. Thank you.