National Aluminium Co Ltd Q3 2025 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Amit Dixit - ICICI Securities Limited - Analyst : I'm Amit Dixit from ICICI Securities. I have two questions for you, sir. In the slide where you mentioned about the CapEx projects. So just wanted to understand the total CapEx that has been committed for these projects, if you can mention project-wise that would be great. And the sort of FX outlook that we could expect over the next three to four years. Shri Brijendra Pratap Singh - National Aluminium Co Ltd - Chairman-cum-Managing Director RC?

Question: Amit Dixit - ICICI Securities Limited - Analyst : Great, sir, that's very helpful. The second question is on the coal security. So as I understand, we have a couple of blocks with us. So just wanted to understand the current limit for these coal blocks. And is there a possibility of getting further enhancement on EC? And what kind of coal security we are targeting in the future when the mini plant also comes up, the new one? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 6:00AM, NALU.NS - Q3 2025 National Aluminium Co Ltd Earnings Call

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : This is Sumangal Nevatia from Kotak Securities. First question on the overall employee cost. So since last few years, it's been steady around INR2,000 crores, INR2,100 crores a year. Can you guide us how are we looking at it over the next one to two years? And in terms of annual retirements, et cetera, how are we positioned?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understood. Sir, annually, how many employees -- what is the employee count trend in terms of retirement over the next two years?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understood. Understood. That's helpful. Sir, on the coal sourcing, just continuing on the previous question. In the first nine months, have we completed this 3 million tonnes which we are expecting this year? Or it is distributed coming also in the fourth quarter? And so can you give us the mix of the coal sourcing currently in the nine months? Unidentified Company Representative Yes, yes. Coal sourcing this nine months -- just one moment. Yes, 49% we have sourced through linkage, 4% through e-auction and balance, 47%, is captive.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Understood. And sir, what would be -- so in between -- we were hearing that there could be an expansion of capacity from 4 million to, say, 5.5 million or something given some automatic approval of EC extension. Is that not now currently on the (inaudible)? Unidentified Company Representative 20% if we achieve the target of 4 million tonnes, the automatic of 20% we can increase. That is around 80 lakh -- 80,000 tonnes we will be able to increase. That will be coming in the subsequent year. If next year, we'll do 4 million tonnes, then the subsequent year we'll be able to -- further go to maybe 4.8 million tonnes.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Yes, yes. But that is already behind us, right? I mean incrementally, we don't expect any further major reduction in cost on the coal front. Is that the right way to understand? Unidentified Company Representative Yes.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Okay. Understood. And sir, just on the CapEx. I mean for the smelter, we will start spending from FY27. So we are looking at -- I think we said INR17,000, plus another INR13,000 for the power plant. So what sort of annual CapEx could we see from FY27 onwards? Unidentified Company Representative If we see -- in the initial year of financial year '27 you are talking?

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Okay. And smelter plus power would be around INR30,000 crores, right? Is that the right understanding? Unidentified Company Representative Yes, yes.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Okay. So when do we expect commercial volumes? Is it FY27 then? Unidentified Company Representative Commercial volume will start next three, four months when we start the trials and all that. FY -- yes, until maybe FY27, March, April onwards, the commercial volumes will start.

Question: Sumangal Nevatia - Kotak Securities (Institutional Equities) - Analyst : Okay. So this INR700 crores, INR800 crores is something which will continue? Unidentified Company Representative Yes.

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Yes, am I audible?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : This is Rajesh Majumdar from B&K Securities. I had a couple of questions. What is the current cost of production of alumina in dollar per tonne? And what is the current cost of production of aluminum, assuming the alumina is transferred at the cost of production in dollar per tonne?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : This is based on alumina being transferred at cost, right?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : This is based on alumina being transferred at the cost price.

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : At cost price. Okay. So my question was that, sir, your cost of alumina has gone up over the years. At one stage, it used to be nearly $170, $180. Now, if you look at the conversion, it is now almost close to $240, $250 per tonne. So with the new -- I understand that the Pottangi mines are requiring much more consumption of raw materials, et cetera, to make the same tonne of alumina. So with the Pottangi mines in operation, will we see a reduction in the cost of production, hopefully, because those mines are very old and these are new mines where the cost of production should be lower? That was the first question, sir.

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Alumina. Unidentified Company Representative Spot production of alumina, whatever is presently there, it will be almost same. Because over the years, what you are telling like earlier, it was $180, now it is around $240, $250. The increase is due to the increase in the maybe employee cost or some other raw material costs. And whatever bauxite, like cost of bauxite, whatever bauxite cost we are getting is now around INR1,000. INR1,000 per tonne in bauxite cost. So there also -- in Pottangi also, the cost of bauxite mining will be around 1,000 tonnes, what we are estimating. So it will remain almost same, which is at the present level.

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : So when you give a cost of INR240, you are including the depreciation? this [INR2,100, INR2,000] includes depreciation cost, is it?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : And even aluminum INR160, INR165 includes the depreciation cost?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Okay. Including -- okay. That's useful. But INR600, INR700 per tonne, what tonne will be the saving on the raw material cost that's what you see?

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : Right, sir. That's useful. And secondly, sir, I was curious about how you would expand the hot metal capacity. Because I understand we have 960-odd ports which are now like in a configuration with 1,200-megawatt captive power. So how is it possible to increase the capacity there by 1 lakh tonne or something? Is that -- what is the technical capability of that? Unidentified Company Representative Actually, that was a thought process when I joined here and I was going through all the plants and all the details. So I thought that hot metal capacity is 0.5 million tonnes and our casting capacity is around 0.6 million tonne. Hot metal is 0.45 million, around 1.5 lakh tonnes gap. So we have requested EIL to make a study. It cannot come as it is. We'll have to do some investment, maybe adding some ports and increasing maybe some captive power also. With small investment, we can have this increase in the capacity of the total overall cast metal. Because for that, our alumina supply and maybe downward casting facilities are already there. Only a number of ports will be required to be added. Of course, we'll have to take some CapEx for that. We have engaged EIL for that to do some study and suggest what can be done. Second option is maybe taking in some scraps. If we get good quality scrap, we'll try to source, and that scrap adding to the casting. So along with the hot metal, we can increase the casting capacity. These are the two options which we are working. These are just the initial thought process. Because whatever casting facility is there, we are not able to use that. We are trying to see what way we can go, maybe short term, medium term, long term, so that to maximize the use of existing casting facilities. But whatever expansions we are planning, that will go as it is.

Question: Rajesh Majumdar - Batlivala & Karani Securities India Pvt. Ltd. - Analyst : So do you have any debt equity ratio in mind for the new project? Any ballpark idea of that? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 6:00AM, NALU.NS - Q3 2025 National Aluminium Co Ltd Earnings Call Shri Brijendra Pratap Singh - National Aluminium Co Ltd - Chairman-cum-Managing Director No. If you take a ballpark figure, then for this kind of capital-intensive industry, you have gestation period of four years. So -- and with our continuous internal revenue condition, then we can afford to have 70-30. No issue with that. And if we are ending the financial year with more than 17,500 network, so company will be in a very good position to finance entire CapEx of metal and power plant expansion through external financing.

Question: Manav Gogia - YES Securities India Ltd - Analyst : I hope I'm audible.

Question: Manav Gogia - YES Securities India Ltd - Analyst : Sir, one question I wanted to ask was can you give me the landed cost of caustic soda for the particular quarter?

Question: Manav Gogia - YES Securities India Ltd - Analyst : INR37,000 per tonne, right? Unidentified Company Representative Yes, yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 6:00AM, NALU.NS - Q3 2025 National Aluminium Co Ltd Earnings Call

Question: Manav Gogia - YES Securities India Ltd - Analyst : 145 million (inaudible). Okay, sure.

Question: Vikash Singh - PhillipCapital (India) Private Limited - Analyst : Congratulations on a very good set of numbers. Sir, just couple of questions. One clarification on the refinery CapEx. We said about roughly about INR5,700 crores, but we understood that there was a cost escalation in the CapEx. Total cost has already run closer to INR7,000 crores. So if you could clarify that?

Question: Vikash Singh - PhillipCapital (India) Private Limited - Analyst : Understood. And just second question on the employee cost. How should we look at the employee cost because the commission is coming? So have we taken -- started taking some provision regarding the same? Or your expectation on the escalation in the employee cost going forward? Unidentified Company Representative Pay commission will be coming after 20th. Pay commission for CPSS has not yet been set up. It is for central government that has -- REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. FEBRUARY 11, 2025 / 6:00AM, NALU.NS - Q3 2025 National Aluminium Co Ltd Earnings Call