Good morning, everyone. On behalf of Systematix Group, we welcome you to the 4Q FY 2025 earnings conference call of NALCO Limited. We are joined today by [Shri Brijenda Patap Singh], Chairman and Managing Director and Director of Finance, and other financial functional directors of the company, along with Mr. Bharat Sahu, Company Secretary, to discuss the company's financial and operational performance for 4Q FY 2025 and full year FY 2025. I would like to thank the management for giving us the opportunity to host this call. At the end of the presentation, we will open the floor for questions, and participants can raise their hands if they wish to ask a question. Now, I request Mr. Bharat Sahu for his opening remarks and introduction of the management team. Over to you, sir.
Yeah, good morning, Shweta, and good morning, all our esteemed shareholders, analysts, and all the participants in this conference. So, in fact, it's a good morning after a great evening. In fact, NALCO posted a very good result, a stupendous result last evening, and I am sure all our esteemed shareholders must have gone through the results. In my opening remark, before we formally start, let me start in a different way. All must be knowing Sergey Bubka, the pole vaulter from Russia, had once said, "I make records and I also break records." Perhaps NALCO is also following the same path. NALCO is creating records and also breaking its own records. And the last result, yesterday's result, that is the financial year 2024-25 result, is a testimony of that one. So, with this background note, I don't want to take more time.
Let me first introduce all our management and the functional directors attending this conference call. Next to him left is Shri Srimanta Panda, our ED, Finance. Sitting next to him is Dr. Tapas Kumar Patnaik, our Director, HR. And next to him is Shri Sadashiv Samantaray, Director, Commercial. Sitting in the center is our CMD and Director, Finance, Additional Charge, Shri Bijendra Pratap Singh sir. And to my right, it is Shri Pankaj Kumar Sharma, Director, Production. And next to him is Shri Jagdish Arora, Director, Projects and Technical. Before we start taking questions from our esteemed shareholders, we would like to have a brief presentation, and I would request my colleague, Mr. Subrat Purohit, to kindly make a brief presentation, and then we'll start taking questions from the participant side. Thank you.
Thank you, sir. I'm Subrat Purohit from NALCO. I'll be starting the presentation. Good morning to all. This has been a historic quarter, a historic year for the company's history. It's my privilege to present the results for the people, and thus we will complete here.
Sir, the voice is not audible. Can you please come show your mic?
Now it's okay.
Okay. Now it's audible?
Yes, it's better, sir.
Okay. I'm starting again. It has been a historic quarter and a historic year for the company. The company has recorded its highest-ever financial performance, be it the revenue, the payment, the margins. I am starting the presentation with this background, and this is a standard disclaimer. The agenda will consist of a brief on the company, its operations. Then I will go through the financial and a bit on the industry outlook. When you see our company, it's one of the most integrated bauxite, alumina, and aluminum power core complex. It's integrated, it's raw material secured, and we are also one of the lowest cost producers of bauxite and alumina in the world. As for our capacity, our all capacities are given here. Bauxite mines, we are having two operating regions, the Panchpatmali, Central and North Block, and South Block.
Our alumina refinery capacities, smelter capacities, we are integrated with our captive power. Recently, we have started our coal production from our coal mines, and it is happy to note that in the year, this concluding year, we have brought licenses for the combined coal mines with a capacity of 4 million. We also are having our dedicated coal facility, and we are having 198 MW coal wind power plants we are having at different locations of the country in Rajasthan, one in Andhra Pradesh, and one in Maharashtra. Coming to the financial performance of the quarter, all figures are given here.
Physical.
As far as the highlights are concerned, we have achieved highest-ever domestic metal sales in this year in the quarter as well. For productions, we have achieved highest-ever thermal power production in this year. All our productions, in all our production units, we are operating at almost 100% capacity. The financial results are published, and it is nicely well highlighted. I think everybody will discuss at the end of the presentation about our financial performance. We have achieved the highest-ever revenue, highest-ever profit, highest-ever margin for the year and for the quarter. Again, we have achieved the highest-ever revenue, highest-ever profit, highest-ever margin, and also the highest-ever dividend in the history of the company. Coming to the LME price trend, this has been a very volatile period since the end of the financial year.
After the announcement of the tariffs by the U.S. government, it has been very volatile. Earlier, the LME price was at about $2,600, but since the announcement in April, it has reduced to $2,300 levels, but again, now the 90-day pause has been announced by U.S. tariffs to all countries, and recently it has been announced for China as well. The trade negotiations are going on, so right now, the price has recovered from the bottom, and it has been currently settled at about $2,450 per tons, so still, the market is unsure and uncertain. They are looking to the upcoming developments on the negotiations and which will shape the market in the future. There are some other cases also, like smelters' restarts. The U.S. Fed interest rate is paused more right now as they are thinking about the rise in inflation concern.
Then there are corrections in alumina prices as well. So these are all setting the aluminum market right now. Coming to the global industry outlook, the global GDP growth, which IMF has predicted in the early of January 2025 outlook, since then, the outlook has been a bit slightly reduced, and the reduction is only because of the tariff-related developments. So the global economy is projected to grow at about 2.8% in 2025 and 3% in 2026. As far as the aluminum sector is concerned, the aluminum sector is projected to grow at about 1.5% from 2024-2025 to 2025-2026, and the market is likely to stay in a slightly deficit trend. Like when you say in 2024-2025, the deficit was about 1 million tons. In 2025-2026, it is projected to be at about 0.7 million tons. The alumina market, the supplier side concerns have been in recent times.
There are production announcements in Australia and other areas. In the alumina sector, the projection is likely to be a little bit on the surplus side, which will determine the prices of both alumina and aluminum. Coming to the Indian economic scene, India is still the fastest-growing economy in the world. The projections for IMF, RBI, and ADB is the country is likely to grow at about 6.5%-7% in the next year. The aluminum sector is progressing very well. The aluminum demand is rising. It is easier of about 9%-10%, and it is likely to grow. The projections are showing that all the sectors, the transportations, building constructions, electrical, there is possibility of huge scale growth in this sector in India specifically.
By 2030, the CAGR growth will be about 6.5%-7%, and the consumption of aluminum is likely to rise to about 7.5 million tons-8 million tons. These are the major business highlights of the company. To reiterate again, we are having the most integrated operation in the aluminum industry, starting from bauxite mines to alumina refinery, smelting, supported by captive power and our own coal blocks. We are a zero-debt company, which gives us leverage to fund our expansion projects. We are having raw material securities for caustic soda. Also, for caustic soda, we are having a JV company with GACL, which is named as GNAL. Coal, we are having our own captive mines. We are having projects in our refinery sites where the refinery expansion of 1 million tons is going on.
Further, we are planning to set up a brownfield expansion of smelter, and we are having a global presence in our products. This is our growth plan, a slide showing our growth plan in all areas of our core operations. We are having one. Currently, in case of bauxite mines, we have already signed the lease deal for Pottangi bauxite mines with a capacity of 3.5 million tons per annum, having a reserve of 111 million tons per annum, which will give us security of bauxite in the long term. The mines are expected to be opened by this year's end. Coming to alumina refinery, the project is progressing well at the moment, and the capacity will be increased by 1 million tons per annum.
We are projecting the mechanical completion to be completed by this year's end, and the commercial operation may be likely in the next year. For aluminium smelter, our project has been approved. The planning process is going on, and the capacity is for 0.5 million tons per annum, and it is expected by the year-end of financial year 2020. And supporting the aluminium smelter will be the captive power plant with a 180 MW capacity. What about our operations and business? We equally put emphasis on our environment commitments. Our mining operations are sustainable. They have been rated as high-star rating from Ministry of Mines. The key initiatives we take are afforestation, waste utilization, advanced pollution control technologies, water pollution, air pollution.
The bauxite mining of Pottangi, where we are hitting a 14.6 km-long state-of-the-art single-flight multi-corridor belt and rail, which is environment-friendly, eliminating the road load of transportation, and also we are installing a second conveyor of 7.9 km -long, which will give our environment a boost. Other details are also shown here for the figures related to our environment. Specifically, we are operating a 198 MW wind power plant, from where we have generated 281 million units in the year 2024-2025. Further, we are setting up another 15 MW wind power in Tamil Nadu. In case of solar also, we are planning to set up 7 MW in the coming years. Company, it is in the philosophy of growing together with a concern for the society. Wherever our operating units are located, we are putting equal importance on our CSR activities.
We have CSR flagship schemes on various sectors like education, health, rural development projects. Some of the flagship schemes are shown here, like the Indradhanush , which sponsors tribal children from Koraput district, from tribal-affected Koraput districts in the private sector residential schools. Then we are having Nantoki livelihood schemes where we sponsor children from BPL families to support their education. Then also, we operate mobile health units at our locations in Angul, Damanjodi, and Pottangi, where more than 1,000,000 patients are treated every year. Also, we carry multiple social development, rural development projects like roads, drainage, water systems, school infrastructure, and other things. Coming to the governance part, the company has been rated as excellent as per the health assessment expertise guidelines.
We are doing 10 low-level committees for the ESG governance, 15 policies and guidelines for ESG governance, and we are putting equal importance as per Government of India guidelines to follow our governance guidelines. So thank you all. Now, questions.
Thank you. We will now move on to the question and answer session. We have a first question from Mr. Kamlesh Bagmar. So please unmute yourself and yes.
Yeah, sir, thanks for the opportunity and congratulations on a very strong set of numbers. Sir, just one question on the part of realization. So what was the realization for alumina in this quarter, and how do you see going forward in Q1, and if you can give some outlook on the Q2 as well?
As far as Q1, you are asking about Q1?
Yeah, I am asking about the Q4 and Q1.
Q4 realization of alumina, if we see it was around.
$600.
No, that was the NSR, which we got around $600, and our cost of production was INR 22,000, and we were getting around INR 50,000. The realization was around maybe INR 25,000 realization was there. Contribution. Net sales realization was around $600 in Q4. Now, in Q1, the net sales realization which we are getting is around $400. The last spot price was around $400.
Okay, $400. And for the quarter, you would be seeing as an average $400?
Average two spot tenders were at $350 also, so it has slightly improved. We are expecting maybe it will be stabilizing around $400.
What is the timeline for our alumina capacity expansion when it will get commissioned?
Alumina capacity expansion, our earlier timeline which we have committed was September this year, but some of the few of the packages are getting delayed due to some of the local issues and some other unavoidable issues. So we are expecting to finish off all the packages by January or February. After that, the commissioning will start. Commissioning itself takes around two to three months, four months. So commercial production maybe will be starting in May or June.
Okay. And lastly, sir, I missed on the figure regarding the cost of production in this quarter for alumina, and how do you see the cost in the Q1?
As far as the cost is concerned, our present alumina cost is around INR 22,000. We expect the cost will be in the same level. It will further reduce maybe by INR 1,000 or INR 2,000 because this year we are trying to improve our efficiencies by reducing caustic soda consumption. Caustic soda is contributing around 20% of the total cost of the alumina. So caustic soda, we are targeted around 111 kg per tons of alumina, which was earlier around 120 kg per tons in the previous years. Even we are doing better than that, so that will give some advantage. Even power cost, if we get some of our internal coal and able to send the internal coal there, that will reduce our power cost. Around 20-30% of the cost of the alumina is power cost, including coal and power, everything. That will also.
So our target is at least we should reduce the cost by around maybe INR 1,000 or INR 1,500, INR 2,000.
For the current quarter, it was INR 25,000 cost?
For the current quarter, it is around 22, hovering around 22.
Okay. Thanks a lot, sir.
Thank you.
Thank you. We'll take the next question for Mr. Adishesh. Please unmute yourself and comment.
Yeah, thank you, and congrats for the great set of numbers. So my question is with respect to our fifth stream of alumina refinery. So in the previous call, you indicated that in FY 2027, we are targeting production of seven to eight lakh tons from that fifth stream of refinery. So is that still holds? And on the similar lines, what is the remaining CapEx on that, and how much of the project is completed as of now?
As far as commercial production is concerned, our plan is we will start the commercial production by maybe May or June of 2026. That is FY 2027. So we will be targeting more than maybe INR 5 lakhs- INR 6 lakhs in that next financial year. CapEx already we have spent around, DPT will tell, around INR 3,500.
Yeah. We have completed around 75% of our financial commitment. So it is remaining 25%. So as our CFO is telling, we'll be completing in the first few months of next year, and we'll start the production in the next financial year.
Yeah, understood. That's helpful. And second, sir, any guidance on third-party alumina sales, external sales? Because this figure is slightly volatile on a quarter-on-quarter basis. So for a full year fiscal 2026, if you can guide how will be the alumina sales to external market?
As far as sales is concerINRned, alumina, of course, some few refineries are coming in Indonesia, in China. The refinery capacity is expanding, so external sales, till now, we are depending, I think 90%-95% of our sole sale is going to the export market. Now, we have to have a few of the customers we are thinking of going for domestic sale also because our alumina production will increase. This year also we have increased. This year we have increased the target for our domestic sales to around INR 50,000-INR 80,000, which was very less last year, so domestic market we are seeing. Export market, of course, the challenge will be there with increase in the alumina availability in the market.
Understood. Just one last question on the brownfield smelter expansion. So in the earlier call, you indicated that the CapEx will start flowing from FY 2027 and total CapEx figure of INR 17,000 crores. So does that still hold? And also in the earlier call, the JV with NTPC for the Cap2 power plant was 1,200 megawatts, but in the presentation, that figure is now 1,080 MW. So what am I missing here?
CapEx, you are talking about the smelter expansion?
Yes, 0.5 MTPA smelter expansion.
Smelter expansion, already earlier we had made a DPR for that. Our plan was to go ahead with that DPR, and that was made with RTA technology. But Artel now is not willing to give their technology, so again, we are revisiting it. Our team is going to Dubai, so we have given EIL a target to give DPR in next six to eight months. And after that, we'll be going in for tendering. Our target is next one, one and a half years. We finish off the tendering activity. And after that, ordering everything will, if it completes in next one and a half years by end of next year, then actual commissioning and all that will take three to four years. That is the plan for smelter.
As far as power plant is concerned, power plant already we had tied up earlier with NTPC, but NTPC model they are planning or they are insisting on making in 600 into 2 capacity power plant. But our requirement is 270 into 4. That's why we are going in for tendering for appointing the consultant. The consultant will be appointed. And parallelly, this will also go along with the smelter.
Yeah. So you are saying that the INR 17,000 crore earlier CapEx guidance that you will finalize later on and that 1,200MW is now the new is only 108,000?
Yes, INR 17,000 crore was for smelter expansion and along with that, INR 12,000 was for CPP. Combined is around INR 30,000. This CapEx will start flowing in financial year maybe 2026, 2027. It will not come. Around 2027, 2028, the CapEx will start coming.
Understood. Yeah. Thanks a lot, sir. I'll get back in the queue.
Thank you.
Thank you. We'll take the next question from Mr. Digant Haria.
Yeah, hi. Thank you for the opportunity. Sir, my question is that around last time, we were thinking that the alumina prices will probably settle around $500. But we've seen very sharp correction in the alumina prices. So if you can just explain globally what has happened because refineries cannot come overnight. We are taking six years, seven years to make the new alumina refinery. The refineries cannot come overnight. And also, if you can explain what has happened on the bauxite supply side because last year, we were all saying that Guinea has probably reached peak production and bauxite supplies are tight, which is why alumina prices are high. So if you can just explain the demand supply scenario here on the alumina, that would be great.
Actually, what is happening, the alumina capacity is this year, a few of the refineries are getting added up. In Indonesia, one refinery is coming up, which is getting commissioned. India also, Vedanta is adding up their capacity. And the smelter capacities in China, a few of the smelters are closed down. In other areas also, some of the smelters which are not picking up, the smelter capacity is not picking up. That's why the alumina accessibility of the alumina is there. That's why we are seeing that overall what we were thinking that it will come around $500, it has gone down to around $400. So we are expecting the same will continue. Maybe it will go up to maybe in between $400-$450.
As far as bauxite is concerned, bauxite locally it is available, but bauxite we know globally most of the bauxite is supplied by Guinea. And sometimes there are disruptions from there, from Guinea. Few of the disruptions last year were there due to which the alumina production was affected. But this year, Guinea again few days back, they have announced that they will not be supplying bauxite to EGA. Again, EGA is trying to consolidate with them. So globally, that is a challenge because one country is supplying around 60%-70% of the bauxite to the rest of the world. So any policy decision, policy changes in Guinea may affect the bauxite supply to the other alumina refineries across the world. Anything you would like to add?
And one thing I would like to add that the figure what you are telling that last year it had gone to very high prices, that all depends on not only the demand supply scenario, it depends on the geopolitical issues also. You remember a lot of geopolitical issues were faced last year. So this type of spike in the prices do happen, and then these normalize. Actually, that always happens in a cyclic manner.
All right. Thank you. That's a lot of details. Thank you so much. Sir, my second question is just one clarification. We said that our cost of alumina production was INR 22,000 a tons, so around $260. Is that number right?
Somewhere around that. It depends on the caustic soda prices and alumina prices. Keeps on fluctuating somewhere around that.
Okay. Sir, what would be a similar number for aluminium production based on all the current prices?
Aluminium, if you see our cost of production last year, average was around $ 160,000. Around % 160,000.
$ 160,000. Okay. Okay. Okay.
Per tonne.
Okay. Got it, sir. Sir, and lastly, on this coal mining, this Utkal block, what is our total coal requirement and what is the peak that we can mine from the Utkal block, and where are we right now versus that? Just that on the coal block.
Our total coal requirement for our power plant is around 7.2 million tons. Out of that, our Utkal D capacity is 4 million tons. Last year, we had mined around 2.8 million tons. This year, we'll be reaching 4 million tons. We'll be reaching to the rated capacity of that both Utkal D combined. And the rest of the coal, which is required around 3.2 million tons, that will be sourced from Coal India through linkage option.
Okay. Okay. And sir, just one follow-up on this. The Coal India price, the FSA price that we'll get from Coal India and our own mining cost, is there a reasonable savings that we do because we mine our own coal?
Yeah, there is a difference in Coal India prices, which we are getting is around, how much? INR 1,900. Must be around INR 1,800, INR 1,900, INR 2,000. Linkage coal is around INR 2,000. And our coal, which we are mining from Utkal D, it is around INR 1,500-INR 1,600. Around INR 300-INR 400 per tons difference is there.
Okay. Okay, sir. Thank you so much, sir. All the best.
Thank you.
We'll take the next question from Mr. Amit Lahoti.
Hi, good morning. Thanks for the opportunity and congratulations on a great set of numbers. My first question is on employee cost, which has declined by 12% in FY2025. So what are the drivers here? Has the absolute headcount reduced, or is there any other cost saving on employee side that we have achieved?
Absolute head cost has reduced. The retirement was there around 250 separations.
430.
430 separations and few inductions we have done. New trainings we have taken, and new trainings we are going to. Maybe 200 gap was there. That is caused to the reduction in employee cost.
So can we expect that to sustain for this year as well?
Yes, yes, yes. This year also, every year, we'll be reducing our employee by around 250 numbers per year. That is the retirement which is going to happen, and recruitment will not be doing that much, so accordingly, we'll try to manage with the lean employees.
Okay. And my second question is on refinery delay. So last quarter, we were indicating this December 2025 completion. Now it has changed to May, June 2026. So what has changed in the last three months that has led to six months of delay?
There has been some delays in the two or three packages. There are some local issues where there are the supplies of laborers from the local issues where there are some local resistance where there. Because it is a tribal area, Koraput area, many times many resistances come. We are trying to overcome those issues. Of course, a lot of support from district administration and all that is also there. Now everything is picked up. Everything is under stalemate. So we are thinking just maybe because December was the completion time, after that, it takes around two, three months for commissioning also. Refinery commissioning also takes two, three months. Maybe that will get shifted by two, three months ahead.
But how confident are we that we will be able to hold the current timeline of, say, May, June 2026? Can there still be a further delay or we are very confident that, okay, this will definitely come by May, June 2026?
We are very closely monitoring. Every week, we are having our own monitoring mechanisms and all that, and all packages we are monitoring at a very close level, and the kind of resource allocation is there in all the packages. All the packages, in few of the packages, the resource allocation was not proper, so now that has increased. Even few packages, some issues were there like rock cutting and all those issues. We have taken the permission from blasting, and blasting has started, which has expedited that packages, so we are confident enough that next May, June will be able to start the commercial production from there.
Okay. Sure. Thank you.
Thank you.
Yes, sir. Can I go ahead with my question?
Yes, sir. We'll take the next question from Mr. Saket Kapoor. Thank you.
Yeah. Namaskar, sir. And thank you for this opportunity.
Namaskar.
Sir, firstly, we have this closing capital work in progress closing balance of closer to INR 4,950 crore. So if you could just provide us input on the closing for how many projects are these, and this includes the one which is getting delayed by six months. So if you could just quantify what amount is attributed towards that refinery expansion that is getting delayed by six months. And also, sir, if you could give us an understanding of the tonnages we have done for our alumina for this quarter and what have been outlined for the ensuing quarter, that is Q1.
I would request my ED. He will explain or [audio distortion] . Regarding this refinery, yeah, this work in progress of this 1 million tons refinery, which is coming with a better technology and better techno-economic parameters, that is 75% we are progressed, remaining 25%. And once we reach 90%, we'll start closing the things. And as it was told earlier, we'll try to complete the project mechanical completion by February or March, and then we'll start commissioning the project. That takes three months' time. And from there onwards, we'll start the production.
Okay, sir. I was just looking at the balance investment done. Anyway, sir, that can I continue.
Balance investment, I had covered it earlier. We have completed 75% of financial commitment. It is along with the project progress. So only 25% of commitment is left. And it is not going to increase our cost of the project. We are completing the project in the approved budget itself. So time has increased, but budget is not increased.
And on the tonnage part.
I hope this is clear.
Yes, sir. Thank you, sir. Sir, on the tonnages part, alumina tonnage, we have done for Q4 the entire financial year. And what are we envisaging for Q1?
Tonnage in terms of production, you are telling?
Yes. Production and sales, sir. Sales would be more appropriate.
This year, we are planning the total yearly tonnage. We are planning alumina is around 2,250,000 tons. Sales, we are planning INR 13 lakhs, no? Sales around 1,250. INR 1230 lakhs+INR 1275 lakhs. Sales we are planning INR 1275 lakhs.
What was the comparable number for last year, sir?
Last year, our alumina production was INR 20 lakhs, around INR 40,000- INR 45,000. Around INR 2 lakhs will be increasing alumina production, and similar amount of sales also. INR 2 lakhs will be the increase.
It was around INR 11 lakhs. This will be going.
Production increment on hydrate would be around 6%. On calcined alumina, it will be 10%. And on metal, it will be 3%, which is achieved last year. In terms of tonnage efficiency, it will be around two lakhs. Yeah. INR 2 lakhs increase in tonnage in both production and sales.
And my last question is on the investment in the GNAL part. If you could just explain to us with note number seven, exactly we have mentioned about INR 500 crore investment in the compulsory convertible debentures. And then some other things have also been outlined. If you could just explain.
Yeah. GNAL was going a very bad path since commissioning that because combined with multiple factors of high-cost term borrowings, delay in commissioning, then unusual depressed caustic soda realization, and also negative realization from chlorine, which is one of the major constants for any chlor-alkali industry for disposal of chlorine. So that has led to cumulative erosion of net worth and profit. So leverages were totally destroyed. That way, both the promoters were not willing to infuse any equity. So the best possible solution that was finalized was the going for a CCD because that was not going to average the leverage also. And it was giving a breathing time with expectation of more than 90%-95% capacity utilization will be able to come over.
That was basically infused not only to provide working capital, but to particularly retire the $100 million ECB that was sitting, which was contributing to a lot of FX loss and erosion also. That is why the CCD was taken with a backstop arrangement from both the promoters with the 40 to 60 ratio with a five-year tenure that has been subscribed by one of the bankers. At the end of five years, either or even before that, there can be an accelerated put option or mandatory put option, or there can be an accelerated buyout or mandatory buyout option. Buyout option to be exercised by both the promoters and put option to be exercised by the investor. That is the situation. After that, there has been prepayment of ECB loan.
Further, GNAL is again negotiating for a soft loan from GSFC to totally pay out the ECB exposure to whatever $41 million that is remaining as of now.
I'll supplement what ED Finance has told that the operation of GNAL was supposed to be 90% plus, and with this chlorine offtake, some improvement, it has started coming in the operating profit area. If it continues for the 90% plus performance, which it has performed for the last four, five months, so this will start coming in the operating profit area.
Okay. Thank you, sir. I have some questions, which I'll join the queue again for my follow-up. Hope for an opportunity.
Thank you. We'll take the next question from Mr. Pratim Roy.
Yeah. Thank you for the opportunity, sir. And congratulations for the good set of numbers. My first question is that the aluminium prices for the quarter, if you compare the Q1, Q2 improvement is very marginal. And volume is also there, but our top line for the aluminium segment has jumped significantly. So can you please tell me what is the reason behind that?
Can you come up again, please?
My question is that aluminium prices for the quarter-on-quarter basis has improved marginally, and our volume is also improved. But overall, top line growth is much more than that. So can you please quantify what is the drivers for that huge jump in the aluminium segment revenue?
Alumina?
Alumina.
Actually, it's due to aluminium.
Aluminum. I'm talking about aluminum.
Aluminum prices also have increased because last year, quarter-wise, if you see, the LME has gone up to maybe $2,600 levels also. Now, in this quarter, you are seeing it has gone down to $2,350. Now it is around $2,450. So LME has gone down in this quarter due to the trade war and restrictions in the duties. That is the main reason where we have a loss in realization in aluminum.
However, growth is there. Growth is in the alumina.
Alumina is where we have got the actual growth, and as far as aluminum is concerned, the growth was on the lesser side.
Okay, sir. And can you please tell me the guidelines for FY 2026 and FY 2027 CapEx? How much will be spent on CapEx side for FY 2026 and 2027?
2026-20 27, our CapEx target is around INR 1,700 crores each year or for both the years. For this year, it is INR 1,700 crores.
Next year, it will be 2,000, no?
Next year, it will be 2,000.
Okay.
And sir, could you please give a guideline of the depreciation side as our project got delayed and it is in FY 2027? So for FY 2026, depreciation will be the similar line of FY 2025, and 2027, it will shoot up again. Is that correct understanding?
Once the expansion, Pottangi mines is operational, and expanded alumina capacity, once it is operational, definitely there will be increase in depreciation cost. Going forward, 2026, 2027, when it will be fully commissioned and all the things will be capitalized, there will be increase, substantial increase in depreciation cost. Because earlier, depreciation was very negligible being a 40-year-old plant. So there will be increase in depreciation cost. But which is expected to be compensated in terms of savings on manpower, caustic cost, and efficiency in some of the components that goes into production of alumina hydrate. And once our conveyor is operational for Pottangi mines, then there will be further saving in landed cost of bauxite at Angul alumina plant. So those will compensate more than the depreciation.
Means FY 2027 number will be much more significantly higher than 2025. 2026 will be slightly less.
In terms of depreciation,
Yes, it is.
Depreciation will be high, but our overall expenditure side efficiency, our operating expenditure will go down because this is coming up with the latest technology, HRD, DCW, the caustic soda requirement. Caustic soda, which is one of the major requirements of making this alumina raw metal around 20%-25% cost is there. That will go down. So for this fifth stream, our overall operating cost will be on the lesser side. So whatever increase in depreciation will be somewhat taken care of by this reduction in cost.
Okay, sir. Thank you, sir. Thank you. And best of luck, sir.
Thank you.
Thank you. We'll take the next question from Mr. Tushar Chaudhari.
Yeah, thanks a lot, sir, for the opportunity and congratulations for the great set of numbers. Sir, what is our captive coal production target for FY 2026? You said we produced 2.8 million tons in FY 2025 and Utkal D, and what about Utkal E?
This year, we are targeting 4 million tons. The rated capacity will come.
From both the mines totally?
Yeah.
So our.
Combined Utkal D and E.
Combined Utkal D and E. And 27 will be again 4?
27 will. That is the 4 is the rated capacity.
Correct. Correct. Okay. And sir, you said about some conveyor built. I missed that point. At which mines you were talking about conveyor belts you built?
That is the new Pottangi bauxite mine, which will feed to our new refinery. Our ED Finance was talking about that particular.
Secondly, any progress on new projects which we had undertaken earlier at CAB, KABIL, Khanij Bidesh, basically lithium and all?
KABIL, as far as KABIL is concerned, KABIL has acquired the mines in Argentina. And non-invasive exploration job was under progress. That is completed. Now we are going for appointing one consultant there. And after that, our invasive exploration will start. The consultant appointment is almost on the verge of final. Our plan is that by the end of 2027, 2028, we will finish off all the exploration. So by the end of 2028, we'll come to know what are the deposits and whether it is commercially viable to mine and economically viable to open the mine there. Maybe somewhere in 2028 or end of 2028, we'll be able to take the decision whether to go in for commercial mining or not after the exploration is over.
Understood. And the Alloy Plant, which we had with the JV with MIDHANI?
MIDHANi?
JV with MIDHANI?
MIDHANI.
Yeah.
MIDHANI, you are asking?
Yes, sir.
MIDHANI JV actually was for making special grade aluminum products. The kind of forecast which was given in the DPR, the requirement increase, it was given that the increase will come in the transportation sector and railways and construction sector. That is not coming up. That project, overall, the investment was around INR 4,500 crore-INR 5,000 crore. That we are not able to justify that project. The IRR is not coming. Still, we are not very much sure whether that will go ahead with that project or not. It is under discussion at the ministry stage because that commercial viability is not coming in that.
Okay, sir. Thanks a lot. Thanks for having me.
Thank you. We'll take the next question from Somaiah V.
Thanks for the opportunity, sir. I hope I'm audible. So the first question is on the global aluminum landscape. So you mentioned potential restart of some smelters in the U.S. and Europe. And also, you have given expectations in terms of this year's global aluminum production going up by 1 million tons. If you could give some color on.
There's a lot of disturbance. Somaiya, can you please speak closer to the mic?
Yeah. Am I audible now? Is it better?
Yes, it's better now.
Yeah. Thanks. So the question is on the global aluminium smelter additions this year, the restarts that you mentioned in the presentation. So could you just help us on what is the incremental capacity that you're seeing in this year in the global landscape?
[audio distortion] Incremental capacity, some of the closed smelters which were not operating, that will come up. New smelters, some of them will come because this year, you see, on an average, global aluminum production is around 72 million tons. So that will be maybe 73 million tons or 74 million tons next year. It is targeting. Next year, the projections are it will be around 73 million tons.
So this is in reference to some of the European smelters that went offline maybe a couple of years back, and they are coming back now. That's the one that you're referring to?
They are coming back, but in China is also some of the smelter due to this carbon emission and reduction in carbon emission, they are stopping those smelter, modernizing it to reduce the carbon emission. So China, some of the production may go down. Overall, the production increase will not be much.
Okay, got it, sir. Sir, also in the last week, there was a news on Guinea revoking some mining licenses. Any thoughts on what could be the impact for bauxite supply globally?
News you are talking about new GNAL, no?
Yeah. Yeah, supply to EGA. Of course, the news. I mean, this is not only EG, there was one news talking about revoking some 40-50 mining licenses there.
[audio distortion] In fact, I think that what you are referring to is the mine owned by EG itself, by the EGA. Global aluminum, alumina corporation, Emirates Global. So that is the mine which will be mostly affecting EG's own sourcing. Otherwise. In general, they are taking. China's bauxite import from Ghana has, in fact, gone up. Now it is 25%-30% in the last quarter. So other global supply of bauxite has not been affected.
Got it, sir. Sir, also on the alumina, you gave your quarterly, last quarter realizations, and then currently, what is going on? So similarly, for aluminium, would you be able to give the realization last quarter Q3 and what you're seeing currently?
You see, aluminum in the last quarter of previous year, it has reached to even $2,600 levels. Now it has gone to this quarter to around $2,400, $2,350 to $2,400 levels. But the projections are there in H2. It will further improve, and it will go to more than $2,500, maybe 25 or $2,550. That are the projections which are coming up.
Sir, I was looking out for more in terms of your realization, sir. Like alumina, you had given $600 Q4, and currently, around $400 is what you're seeing. So similarly, in aluminum, just want to understand if the Asian premiums have helped a bit in the realizations.
Our realization is also linked directly to the LME. Whatever LME prices are there, our realizations are directly linked to it.
Can I add something? Yeah. LME also, this way, in our pricing mechanism, we captured the Asian premium. So definitely, that also added. Apart from what LME, in fact, last two quarters, we didn't have any export. You might be knowing that. So in domestic realization, the exchange rate, the Asian premium, all those are captured. So you have to estimate accordingly. Above LME, the domestic metal realization was more than $2.5.
Got it. So in general, Q4 had a good support from Asian premiums, sir, compared to Q3?
No. I think what the quarters in 2024, 2025, the Asian premium had come down towards the end of last quarter. Earlier, it was more than $100. Then it came down.
Got it. So one small clarification. When you gave the cost of production, I presume that includes the depreciation cost also. If you could just give the expectation, that would be helpful, both in alumina and aluminum. So when you said [audio distortion].
In the present cost, the depreciation is not there. Depreciation is almost negligible because the plant is already very old. So in the present, whatever cost of alumina or aluminum we are telling, the depreciation is almost negligible. It's now.
[audio distortion] It is around 1,000 now in alumina because of whatever capital investment that goes into high equipment and other investments in mining equipment. But going forward, this is going to be almost near about to a little less than that, double, if we are coming up with the refinery and our bauxite mines. For metal, the depreciation component is around 5% of the cost of production.
So of INR 160,000, 5% is something.
Yes.
Got it, sir. Thank you, sir. Helpful.
Thank you. We'll take the next question from Mr. Akhilesh Kumar.
Yeah. Thanks for the opportunity, sir. So my first question is on the captive coal mining. So what is the current rate of production from Utkal D and E? And also, as you are guiding cost difference of INR 400 per ton from coal linkages, would it be fair to assume that cost savings would be higher given our captive coal will replace e-auction instead of linkage coal?
The year coal production kitna karega? Our Director of Production will reply to you.
This year, we will be producing around INR 40 lakh tonnes, 4 million tonnes this year we have planned from Utkal D and E.
Sir, on the cost difference guidance, would it be fair to assume that it will be more than INR 400 as it will be replacing e-auction?
The difference between e-auction price and our price, e-auction or maybe linkage price, if you say, linkage price of coal from Coal India and our price is around INR 300-INR 400 per tonne. Our price is around INR 15-INR 16.
On that only, sir, since captive coal will be, I assume, will be replacing the e-auction instead of the linkage one. So the difference with e-auction and the captive coal price would be higher. So would it be fair to assume that it could go more than INR 400 per tonne?
Actually, auction prices are very variable. Now, earlier, it was on the higher side. Now, it has gone down to around INR 1,900 or INR 2,000 also.
INR 2,200.
INR 2,200. It's close to. So it was coming close to the linkage coal. Only sometimes it depends on the mines from where they are giving it. But if you see the difference between e-auction and our coal difference, then it will be slightly maybe INR 500-INR 600 rupees difference. And linkage and our coal is maybe INR 300-INR 400 rupees difference.
Right. Okay. Thank you, sir. And my second question is on the smelter project. So what are the economics there? How much IRR and ROC we are assessing? And at what price assumption what we are taking into for aluminium while building those IRRs?
The proposal which our board had approved for INR 17,000 crore of investment in smelter and power plant would cost another INR 10,000 crore. That time, this IRR was taken. So now we are coming up with the detailed project report, the fresh detailed project report for smelter as well as power plant. And after that, we'll be coming out with what will be the IRR and what will be the return on capital.
Sure, sir. Thank you so much.
Thank you. We'll take the next question from Mr. Sumangal Nevatia. Please go ahead.
Yeah. Thank you, sir, for the chance. So first question is on the coal block. In between, we were talking about applying for higher EC, maybe from 4 million- 5.5 million or something. Is that plan still on, or we should expect this 4 million tonne only to continue?
See, you have asked a very right question that we can increase 20% without even taking EC also. But if you want to increase it beyond 20%, for that, environmental clearances and other clearances have to be taken. But for this year, we are sticking to four million tonne. And as we progress this year because this coal is new to our power plant, and we are mixing it up 50% with the MCL coal. So we'll take the performance, and then we'll decide upon. We have the liberty of going up to 6 million tonne in coming financial year. That decision will be taken after six months.
Understood. So very clear. Sir, today, what would be our employee count? Around 4,600?
4,800.
Okay. Understood. Sir, the net reduction over next two, three years, what are we looking at?
Almost 250 per year.
Per year. So we will go down to as low as 4,000 employees, right?
Yes, yes. We will take something also.
Some inductions will be there. Not at that rate, but induction, of course, the remuneration at the induction stage will be on the lesser side. Where employees are retiring, there are very high remunerations there.
Understood. So this year, our employee cost went down to almost INR 200 crores. What is the guidance for 2026 and 2027? Is the reduction will continue, or we should see it stabilizing at around INR 1,800 crores?
The employee cost movement either downward or being static has been the composition of two factors, basically. Superannuation at a higher level and induction at lower level. The company's performance and profit, which leads to a component of the pay being given to employees. With a higher profit this year, definitely that component is quite substantially high, which is not likely to be sustained in next year, as you all know, because of the declining alumina price and even if our production volume goes up, so profit will not be to that extent. To that extent, payout to employees will also get reduced. It will be very premature to talk of figures now. On the employee cost, the fixed and other salary components will come down. Then again, it depends on the financial performance and the payout.
Understood. And sir, this year's INR 1,800 crores, it already includes the incentives of good profitability in FY 2025, or it is included in 2026?
Yes. Yes, yes. It is included already. It is accounted.
FY 2025, that is accounted, sir.
Understood. Understood. Sir, this year, overall, our sales of alumina and captive usage was still lower than production. So did we have any increase in alumina inventory?
No. The alumina sale will always be lesser than the alumina production because almost half of it, slightly less than the half, goes to the smelter for aluminum production. So out of the total production, almost INR 10 lakh tonne goes to the smelter.
Sure, sir. Of course. So if you use, say, 1.9 multiplier, then also there was appearing some gap. So I just wanted to know if we are.
We have increased our inventory at the smelter. Three months back, our inventory at the smelter was around maybe 10,000 tons, 12,000 tons. As of date, at the smelter level, our inventory is around 60,000 tons, 65,000 tons.
Okay. Understood. That explains.
So for better operation and to take care of any risk, we are keeping some higher stock of alumina in smelter because frequent logistics issues are there because of the railway movement and all. We are totally dependent on railway. So that is a decision taken by the company to have safety stock.
Understood. Understood. Sir, my next question is on aluminium cost. So this year, there has been a good reduction. Were there other elements except from the captive coal and employee cost contributing to this reduction in FY 2025?
CP Coke. The cost of CP Coke has gone down. The CP Coke cost reduction itself has contributed around, I think, INR 450 crore-INR 500 crore saving. That was one of the major savings as far as raw material is concerned, CP Coke. And caustic soda, of course, that was in the alumina side. Caustic soda has also given us around INR 150 crore. And CTP cost has gone down slightly. That has given around maybe INR 70 crore-INR 80 crore. And efficiency is also somewhat increased in the efficiency. That is reduction in the caustic soda and CP Coke. That has given around maybe INR 100 crore.
Okay. So in 26, are we seeing any reversal of any of these carbon-related costs as of now?
Already.
Yeah. In FY 2026, there is already a reversal both in CP Coke and the caustic soda price. Also, there was a slight reversal. But again, in last maybe eight, 10 days, it has again started coming down. It had gone up, but a few days back, it has started. But since our ordering is for a six-month cycle, so we don't get every month or every now and then movement benefit or cost. But there is already a little bit of reversal in CP Coke and caustic soda price.
No, actually, the thing is that the raw material prices depend on the raw material cost to the suppliers. It is very difficult to predict whether the prices will go up, how much it will go up or go down. But what our ED Finance were telling, it is the momentary figures. But actually, it is very difficult to assess what exactly will happen. But we are hopeful that the prices will be competitive.
Understood. And sir, just one last question on the CapEx on INR 1,700 crores. Is it possible to give a broad breakup of how much is maintenance, how much is towards refinery, and maybe for future smelter, how much are we accounting for?
the capex breakup, capex. Refinery is around 60. This INR 1,700 crore, INR 1,100 crore would go for the refinery and Pottangi bauxite mine and other major projects. The rest of all will be modification, EMR projects, addition modification, and repair projects in both the complexes.
Understood. Understood. All right, sir. Thank you so much. And I hope this call initiative continues every quarter. Thank you for this call. Thanks.
Thank you. Thank you.
We have a follow-up question from Mr. Kamlesh Bagmar. And there's no response from the participant. Saket Kapoor?
Yes, sir. Thank you, sir, for giving this opportunity, and as Sumangal ji has mentioned, we were looking forward for continuity of these calls. These are very exhaustive and informative. Sir, when we look at the depreciation line item, there is some reversal also of ₹76 crore for the quarter. So if you could just explain to us how that has worked out, and my second question is, if you could give us the realization for.
Yes, yes. [Foreign language] .
Secondly, sir, what was our alumina average realization for the year as a whole?
As far as alumina average realization for the year 2024-2025 was around $590 for the year 2024-2025. And as far as depreciation is concerned, the reversal of depreciation, I would request ED Finance, Subodh, just find out what is that.
Yes, sir. Depreciation reversal, we are talking Q1 or preceding quarter?
Q1, sir. December quarter versus the March quarter.
Q3 versus Q4.
Yeah, Q3 versus.
Different appreciation reversal [Foreign language] ?
Lastly, sir, you mentioned about the alumina prices now trending between $350-$400. Are that managed in line with our quarterly run rate? Or are we seeing any dip in the shipment also Q1, Q? Means quarter four, the shipment, and quarter one, the shipments are in alignment?
Can I comment?
Yeah, yeah. Shipments are distributed across the year. We'll be selling around 1,275,000 tons in the current year. Out of that, we'll be exporting around 1,230,000 tons. And shipments, we have already planned monthwise shipment for the whole year.
Okay. Depreciation Q4 over Q3 reversal is mainly due to a change in the estimate for threshold limit for capitalization of major spares. Earlier, it was a very low amount, which we have increased to a little higher amount. Then second was the reassessment of our lean slurry project, mines developed with MCL, where our ash disposal takes place. That assessment is taken every year-end. So the latest assessment has increased the void to be filled by almost double. It was earlier assessed at 2.2 years, now 3 years, now it is 5 years. So that has also contributed to reversal of depreciation. Then there was an impairment earlier in Q3 of wind power assets, which has been going on for the last few quarters. Now, this fourth quarter, we have taken a fair valuation of our wind power assets.
Based on that, there was a reversal of impairment provision. So all these three components have led to depreciation reversal.
Yeah. Thank you for all the elaborate answers. Only one thing was left was about the finance cost also, sir. We are seeing this line item also cropping up Q1, 19 crores [audio distortion] , and for the year, it is around INR 59 crores. So what have led, although we are a net cash company, but since the finance cost line item has now started surging up, it was around INR 59 crores.
This is nothing, but there is nothing in cash outflow. It is nothing but accounting treatment only. Now, the CCD is one part we talked a few minutes earlier. That is a component of backstop arrangement. Under accounting standard, it has to be treated as a guarantee. For that, a financial obligation has to be created. That will be unwound towards the end of the fifth year. To that extent, it has gone INR four crore. Then there is a mine closure obligation of Utkal E block, which now also has come within operationalised. To that extent also, it has increased. All those things are only either these are notional costs. There is no interest outflow, nothing. Only interest on obligation towards backstopping support of Zinal and issuance of compulsory debenture, then only interest on mine closure obligation. These are the things.
Thank you, sir. And all the best to the team, sir. Thank you. Thank you, sir.
Thank you. So can we take one last question from Mr. Aditya? He has his hand raised.
Yes, yes.
Aditya, you go ahead.
Yeah, just one last question, sir. So on the starting of timeline for Pottangi Bauxite Mine, so in the last call, you said by December 2025. So does it hold, or you will extend it because of the delay in the smelter, delay in the refinery? Sorry.
Pottangi Bauxite Mine starting, we are planned by June of 2026. That is the timeline given to us. And already we are planned. And by June of 2026, we'll be doing it because smelter is also getting delayed. So our requirement is not there. So by June of 2026, we'll start the mines.
Understood.
Pottangi Mine has got all the clearances. It has got all the statutory clearances now. And we are working on it to start it.
Understood. Understood. Just on the fiscal 25, what was our coal sourcing mix? How much was linkage, E-Auction, and captive?
Our coal requirement is around 7.2 million tons. Out of that, this year, our plan is four million tons will be captive. And rest will be from linkage.
Okay. Thanks. Thanks a lot.
Mr. Kamlesh, I think in your earlier first session, you asked about this E-Auction 4. That is only 5%-6% of our coal sourcing. It's very less quantity. E-Auction already. And the figure I want to stand corrected. It is not $2,200. It is $2,350-$2,400. The last E-Auction price we realized in towards November. After that, there has been no increase because we are participating in E-Auction for our SPP in refinery also. It is at the reserve price only we are getting. E-Auction, because of excessive coal production or adequate coal production in the country, there is no pressure on E-Auction coal price.
Thanks a lot for all the elaborate answers, sir.
Thank you.
Thank you. We'll take that as a last question. I hand over to the management for their closing remarks. Thank you so much.
First of all, let me congratulate the collective on all our shareholders, stakeholders for having a confidence in us. And on behalf of NALCO Management, I would like to assure that whatever growth we have achieved in this year, almost 46% growth in EBITDA, 46% EBITDA margin was there. Of course, that was triggered off due to high alumina price and high aluminum prices. But we are taking a lot of measures. Like this year, we have planned for increase in alumina production, increasing our efficiencies, reducing our cost. So this year also, whatever plan we have made, physical performances and financial, we will be targeting around maybe 36%-37% EBITDA margin. And whatever revenue generations we had this year, almost we'll try to achieve the similar kind of revenue generations. And profitability, of course, may vary depending on the prices of alumina and prices of aluminum.
But our own internal control, that is increasing volumes, increasing efficiencies, that is increasing technos, and reducing the cost. We are working hard on it to improve the performance of the company and give maximum benefit to our shareholders. Thank you.
Thank you so much.
Thank you. Thank you very much.
Ma'am, we would just come to the end of this conference call.
Yes, sir.
Okay. Thank you.