Ladies and gentlemen, good day and welcome to the earnings call of National Aluminium Company Limited, NALCO. Post-declaration of the financial results for quarter and half-year ended September 2025, hosted by Systematix. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference call, please signal an operator by pressing star and then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Dikshit from Systematixs Group. Thank you, and over to you, ma'am.
Thank you, Operator. Good evening, everyone. On behalf of Systematics, we welcome you to the 2Q FY 2026 and first half FI 2026 earnings conference call of NALCO. I would like to thank the management for giving us this opportunity to host the call. I now hand over to Mr. Bharat Kumar Sahu, Company Secretary NALCO, to discuss the company's financial and operational performance for the second quarter and first half of FY 2026. Over to you, sir.
Good evening. Namaste. Greetings from National Aluminium Company Limited, a Navratna CPSE under the Ministry of Mines. I take pleasure in introducing the NALCO team in today's post-earnings call. NALCO management is represented by Shri Brijendra Pratap Singh , Chairman and Managing Director; Dr. Thapos Kumar Pattanayak , Director HR; and Shri Abhay Kumar Behuria , Director Finance. Myself, Bharat Kumar Sahu, Company Secretary of NALCO. Today, NALCO published impressive Q2 and H1 results after the board took it on record in the meeting held in the afternoon. A present regard is already uploaded on the website and in the stock exchange site as well. Now, I'll request our CMD sir to kindly highlight the results and the outlook of the company. Over to you, sir.
Good evening, everybody. Myself, BP Singh, with NALCO, and with me, my Director of HR, Dr. Thapos Pattanayak , and Director of Finance, Mr. Abhay Behuria, is here. We are very glad to inform that with the dedicated efforts of all the employees of NALCO, we have been able to record best-ever Q2 and H1 performance, both in the terms of production and financial. Our Q2 performance and H1 performance have been excellent. If you see Q2 performance, like-to-like Q2 2024-2025, our excavation, bauxite excavation, increased by around 13%. Alumina production increased by around 15% Q2- Q2 compared to last year. Cast metal production also increased by around 3.48%. Our overall revenues from operation increased by 7.27%, and expenses reduced by around 3.34%. Overall, if you compare PBT and PAT, we see around 34% increase in PAT is there compared to Q2 last year.
If you compare H1 performance of last 2024-2025 and H1 performance 2025-2026, there is a substantial jump in that. Like excavation has increased by around 6.25%, bauxite excavation, calcined alumina production has increased by 31.33%, cast metal production has increased by 3%. Revenues from operation have increased by 18%. Our profit, PBT profit before tax, has increased by 47% and PAT by around 50.2%. Alumina sales have also increased by around 81%. The major contributor, if we see H1 compare H1 of 2024-2025 and 2025-2026, has been the increase in volumes. Our alumina volume has increased substantially. And our efficiencies. Efficiencies have also increased. The increase in volume has given us around INR 700 crore, and efficiency has given us around INR 300 crore if we see compared to last year's H1. That is the performance, and we are continuously striving to improve the performance of the company.
Our expansion plans are also there. Our refinery expansion is there. Almost 80% of the expansion is complete, and we are planning next year, June 2026, to commission the refinery, 1 million ton refinery, wherein our existing refinery capacity, which is around 2.1 million ton, will become around 3.1 million ton. In smelter also, we have a plan of expansion that in coming days we are going to plan, which is we are planning to bring a 500,000 ton smelter in the next 3-4-5 years by 2030. We are having a robust, very good result, both in terms of physical and financial. Any queries from any questions from the participants who are there in the conference call, we would like to take on the questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the queue, you may press star and two. Participants are requested to please use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Amit Lahoti from Emkay. Please go ahead.
Yeah, thanks for the opportunity and congratulations on a good set of numbers. My first question is on alumina, where we are doing the expansion project. Are we on track to achieve commissioning in early FY 2027 as per the previously guided plan?
We are not getting you properly. Can you be a bit louder?
Of course. Our expansion plan, earlier, it was scheduled to be completed in September 2025, but it has got slightly delayed, and now our revised target is June 2026. Already, we have revised it earlier. Now we are on track, and whatever timelines of June 2026 we are taking, we have taken, we will commission it in June 2026.
Okay. My second question is, we sold more volumes in Q2 than in Q1. What is our inventory management strategy here? Could we see more sales volumes in Q3 as well, more than the production numbers?
You're talking in terms of alumina?
Yeah.
Alumina, as far as our alumina sales are concerned, whatever production we are doing, around 50% of the production is getting consumed in the smelter. The rest of the production is to be sold in the domestic and export market. Of course, export is the main market we are doing the selling. Our inventory, which we have a carrying capacity of around 75,000 tons in our Vizag silos and around 36,000 tons, 75,000 tons in Vizag and 36,000 tons in Ramagundam. We cannot store a lot of materials there. We have to, whatever we are producing, we have to sell it. On average, we are planning that four to five shipments per month will be exporting to outside, and our domestic sales will be around in between 10,000-12,000 tons in the remaining months.
Okay. Lastly, do we have any hedging volumes in aluminum? Any hedge in volume and prices?
No. We have not gone through that area because most of the product of aluminium is our domestic sales. We have not tried to go for the hedging because our price mechanism is very transparent and based on our alumina. We do not feel it is required for NALCO now. We have not gone into that, into now, hedging.
Okay. Thank you and all the best.
Thank you.
Thank you. Our next question comes from the line of Aditya Welekar from Axis Securities. Please go ahead.
Yeah, sir, thank you for the opportunity. My question is with respect to our fifth stream of alumina refinery. How much are we targeting for FY 2027? In earlier call, we had said a number of 500,000-600,000 tons. Is that number intact? Can we expect a full ramp-up in FY 2028?
Yes, yes. That will be the full ramp-up there. Whatever we have planned of 500,000 tons, that will come because in June, when we will commission, we will be having around eight to nine months in hand. 500,000 tons is the plan which we are having now also. FY 2028 will be the full ramp-up.
Understood. Coming on the smelter expansions, in earlier call, you have said that we will file for DPR in the next two to three months. At what stage are we? Means, is the DPR ready now, or it is pending?
No, no. In the earlier call, whatever I have told, that was not two to three months DPR preparation. That was the appointment of consultant. Our plan as of now is that both for CPP and smelter, our DPR, we have appointed the consultant for CPP and DPR for consultant for smelter is on the process. This month, it will be appointed. They will be taking six months to make the DPR. Our plan is 26 June, maybe June, July, the DPR will be ready, and we will take it to the board. After board approval, we will start the tendering process and complete all ordering by 27 March. After that, the actual groundwork will start. From there, three to three and a half years will be the timeline for commissioning of the plant. Means somewhere around 2030, last December 2030.
That is the plan which we are having.
Understood, understood. So basically, our CapEx for that smelter will start, will kickstart from 2027 onwards, right? Is that understanding correct?
Yes. Start from 2027 onwards, yes. Means financial year 2027, 2028, it will come.
Right. What will be our guidance?
In three to four years.
Yeah. Go ahead. Sorry.
Total CapEx? Total CapEx involvement?
Yeah. So for 2026.
Total CapEx involvement for smelter, the CapEx required will be around in between INR 17,000 crore-20,000 crore. And for power plants, it will be around INR 10,000-11,000 crore. So combined, if we see, it will come to around INR 30,000 crore.
Right. From the first, from FY 2027, on a ballpark basis, what kind of CapEx means we can expect, we can build in? What will be the guidance of CapEx for FY 2026?
Yes, very good question. If you see the balance sheet and net worth of the company and the cash generation being made from every year, and presently, we are having end of this September, we are having a cash balance of around cash, and that is total cash and equivalent, cash equivalent, it is INR 7,900 crore. And if you go on earning profit in this rate, then we will have a balance of near about INR 20,000 crore plus. We do not think our requirement is INR 30,000 crore, okay? There are two models we are now interpreting to go for this CapEx. One is smelter EPC and power EPC.
If you go to the project in EPC mode, we may need at the end of the year, 2027, 2028, or 2029, the requirement of fund will be around INR 5,000-6,000 crore borrowing fund because our cash balance will take care of the intermediate payment. If you go to the second model, EPC and smelter and JV, 50% JV power, then we may not require any outside fund support to finance our project. This is out of the projection which we have made.
Okay, sir. Understood. Thanks a lot. Thank you.
Thank you.
Thank you. Our next question is from the line of Vikas Singh from ICICI Securities. Please go ahead.
Thank you, sir, for the opportunity. Congratulations and good set of numbers.
Sir, just coming back to our alumina sales. So we probably have drawn down the inventory now. How should we look at the second half total alumina sales with this annual guidance? Hello?
H2 also, whatever our alumina sales, like H1, we have done the sales of around 700,000 tons. H2 also, our overall yearly plan was around 1.2-1.25 million tons. H2 sales will be around maybe somewhere around 600,000-650,000 tons of sales should be there.
Noted. How should we look at the average prices? What prices was the average you have seen in the Q2 for both aluminium and alumina?
Average prices, if we see in Q2, the average price which we got was around $380. As of now, as of date, the spot prices are around $320. H2, we are expecting somewhere, if it is slightly favorable, it will be somewhere in between $320-$340.
Okay.
Alumina. If we see metal, if we see metal LME in the Q2 was around $2,597, around $2,600. In the remaining, as of now, the LME is around $2,850. The projection is there it will go to $3,000 also, but it all depends. We are expecting that in H2, the LME will somewhere be in between $2,800-$2,900.
Okay. Sir, any progress we have made in the CAMYEN Joint Venture, which we have tried in Argentina, or any other rare earth metal? Because there's a lot of buzz that we are looking to some of the rare earth metals. If you could give us some idea about those segments.
As far as CAMYEN is concerned, CAMYEN, we have got five mines in Argentina. With all five mines, non-invasive exploration is complete. We have done the non-invasive exploration. After that, now we have to go for invasive exploration. The result of non-invasive exploration was good. Non-invasive means we do it from the surface, from the top. Now we have to do the drilling and see the actual depth where the lithium is available. For that, the appointment of consultant has been done. This consultant is going to appoint an exploration agent, which will be done in the next one or two months. This exploration agent will start the exploration. In the next six months, we'll be knowing the results at what height, at what depth the lithium is present. After that, it is the responsibility of the exploration agent to set up a pilot plant.
They will set up a pilot plant there. The result of the pilot plant regarding the grade of lithium and the commercial mining, that will come in next maybe eight to nine months. That means next one, one and a half years, next one and a half years, we'll be able to know whether the commercial mining there is possible or not. Since there are already operational mines there, the Chinese mines are already operating in the nearby area, we are quite hopeful that the lithium will be there and the commercial mining will be there. After this exploration, next one and a half years, we'll come to know what level of commercial mining we have to do.
Noted. Sir, just one last question. This fifth stream of alumina, while we will be completing next year, by that time, what would be the total CapEx you would have invested in this project, basically? What is now the restated IRR given the alumina prices are lower? Plus the Pottangi bauxite mine update, by when you are expecting it to start?
As far as the total CapEx is concerned, the total CapEx is around INR 5,000, 100, 200, 300 crore alumina project. Somewhere around that will come total for alumina. As of now, we are seeing the alumina prices are on the lower side. Depends on the global scenario of the ability of the bauxite, ability of the alumina. It can go high also. It is very difficult to calculate the IRR and all that. Whatever we are seeing, whatever our cost of production of alumina will be there, we will be getting at least we'll be having a positive margin to that. Minimum, we'll be getting a INR 10,000 plus of margin to that of our export market or in the domestic market. We will be having a positive margin in alumina. As far as Pottangi mines is concerned, this month itself, we are going to order the MDO tender.
Our target is by June, we have to start the mines.
Noted.
Thank you. That's all from my side.
Okay. Thank you.
Thank you. Our next question is from the line of Kirtan Mehta from Baroda BNP Paribas Mutual Fund. Please go ahead.
Thank you, sir. The first question was about our refinery expansion. You have mentioned that we have achieved 80% physical completion. Could you highlight what are the key packages pending within 20% completion and what are their timelines? The second related question was, what is the actual capital spend that we have done so far? How is our plan for sort of rest of FY 2027 as well as FY 2027 on the capital CapEx spend for the refinery?
As far as the physical completion of the project, around maybe 77-78% is done. A few of the packages like precipitation tank, hydrate filtration, calcination, evaporation, these are the four, five packages which are very critical. These four, five packages and the rest later is on the electrification, that is the laying of cable and final instrumentation and automation job, which is the last thing to be done. All these timelines, what we are taking is almost the structural work, structural action, equipment action of these critical packages will be over by March or April. From that, three months for overall electrical layout of the cables and connections and trial and testing. That will take maybe three months. June, we are targeting to June we will start the commissioning process.
As far as the CapEx expenditure is concerned, till date, we have done around INR 4,500 crore of CapEx expenditure in this project.
The plan for the H2 FY 2026 as well as FY 2027, if you can break up your CapEx spend plan as well?
What do you exactly mean?
No, I was asking capital expenditure till May. For the balance in FY 2026, how much CapEx you plan to spend on the refinery and what would be your spend on the refinery for FY 2027?
By end of 2025-2026, our CapEx expenditure, we have already accumulated expenditure is INR 4,500 crore. In the remaining four months, we are expecting to be spent around INR 600-700 crore on the refinery part. The balance, since the completion date as EPC contractor as told, is by June we will be completing this project and the project closure will be there. The balance 10-5% payment will be released in that year, 2026-2027. By 2026-2027, the project payment and expenditure will be closed totally.
Thank you for this detail. Also, you mentioned about that they will earn minimum margin of around INR 10,000 per ton on this project. How does this compare with our existing alumina refinery, this margin? What would be the difference between the new refinery and existing refinery?
Existing will be slightly better because the depreciation will be not there. We will not be having interest. In this refinery, the cost will be on the lower side because the manpower requirement will be less. It will be having a better efficiency. The cost of the consumption will be less. The volume with one stream. Now in the existing with four stream, we are making 2.1 million ton. In the new one, with just one stream, we'll be making 1 million ton. We'll be getting the benefit of increased volume, increased efficiencies. The cost, whatever cost we are increasing now, only slight increase, maybe 1,000 or 2,000 ton, which is short-term increase in the cost will be there. Presently, we are getting a clear margin of around $12,000, $13,000, $14,000 ton.
Maybe that will come down to maybe 11,000 ton in the expansion refinery alumina.
When you say 11,000, it would be the combined operating in EBIT margin that we are talking about, correct? For the combined operation, total alumina refinery cost?
Alumina, we are talking about alumina.
Alumina.
Alumina cost, whatever our total cost of alumina and whatever rare earth we'll get, the difference will be there will be around 10,000-11,000.
Sure, sir. One last question from my side.
Yes, yes, sir.
Sorry, sir, please go on.
One last question for my side. Could you remind us basically the sensitivity of our profit to $100 change in alumina price and $10 change in alumina price? Aluminum price $100 and $10 change in alumina price.
Yeah, if it's $200. Whatever realization we have achieved in the H1. There is a fluctuation of alumina price, almost 50 last first of the year, and after October onwards. We are able to sustain that, no issue. If it is very $100 fluctuation from the present level, that may affect somehow. Our cost, since the gap is much more between our cost of production and the realization, we will not be affected much. What will happen now, if we have supported segment in alumina segment, then our metal price will be definitely higher. It will take care of the success which we are expecting in alumina. As a whole, company as a whole will not be affected much.
Sure, sir. Thank you.
Thank you.
Thank you.
Our next question comes from the line of Shwetha Dikshit from Systematics Group. Please go ahead.
Thank you. I have one question regarding the commissioning timelines. When we are targeting commissioning by June, when do we expect the commercial production to begin? What is likely to be the ramp-up schedule? I wanted to understand how we are targeting 500,000 tons of alumina sales in implemented alumina sales in FY 2027.
Commissioning, when we will start in the commissioning in June, it will take around two to three months to ramp up the production to maybe 60-70% level. That's why we are targeting around 50% of the production we'll be achieving in the next year of 1 million, 500,000 we'll be doing. If we start in June, maybe somewhere in August, September, we'll be able to because it is a chemical plant. It doesn't take a lot of time. Three to four months, we can reach to maybe 70-80% of the rated capacity if everything is okay. That is our target. Next year, that's why we are planning. We'll be having full six months in hand after September. That's why maybe we are planning 500,000 tons of production will come from the refinery, new refinery.
Again, we are looking at 500,000 ton of capacity and expecting you to utilize that 500,000 ton at almost 100%. Is that, it might be theoretically possible, but does it seem to be practically possible that we achieve for the remaining six months, we achieve almost close to 100%?
Remaining six months, maybe we'll be ending up with somewhere around 70-80%. Depends on how the commissioning goes. That depends. That is why we have planned we will be doing around 500,000. As far as sales is concerned, we are targeting domestic markets to increase our sales in the domestic market. We are targeting some long-term buyers. We are splitting on UI. We have long-term customers from maybe Dubai or Rusal or somewhere who have a long-term tie-up with us. Whatever increase in volumes of alumina will be there, that will get absorbed there.
All right. Noted, sir. Thank you.
Thank you.
Thank you. Our next question comes from the line of Pinakin from HSBC. Please go ahead. Pinakin, your line has been unmuted. You may proceed with your question. As we are not receiving a response from the current participant in the queue, we will move to the next participant. Our next question comes from the line of Pallav Agarwal from Antique Stock Broking. Please go ahead.
Yeah, good evening, sir. First question was on the divergence between.
Good evening.
Hello. Am I audible?
Sir, you are audible. You may proceed.
Can you be a bit louder?
Yeah, okay.
A bit louder.
Yeah, is this better now, sir?
Yeah, it's okay.
Yeah, so the first question was on the divergence between aluminium and alumina prices. Normally, alumina is probably at a 14-15% off the spot alumina aluminium prices over the long term. Recently, we have seen that alumina has been pretty weak, whereas aluminium has continued to go up. Any particular reason for the weaker alumina prices right now?
Weaker alumina is basically due to the ability of the alumina. Around two or three refineries have started in Indonesia, and some smelting capacity has also gone down in a few of the areas. In China also, they have restricted their capacities. In some other areas, some smelters also, the capacity has gone down. That is why the ability of the alumina is more in the market, which has caused to the price pressure on the alumina.
Okay. What about the Chinese alumina refineries? Their cost structure is pretty high because probably they are based on imported bauxite from Guinea or some other imported countries. Do you think that we have not really seen alumina trading below $300 for a sustained period of time? Is there a possibility that you can see some recovery in alumina prices over the medium term?
Off late, normally in the Q3 and Q4, the productions at all places are on the higher side. The recovery of the prices, historically, we see in the Q3 and Q4, we get better prices. We are expecting to go somewhere around $350, it should go.
Sure, sir. Also, on the cost part, are we seeing any inflation in cost for CPC, COC, or CT Pitch on the aluminum or caustic soda on the alumina side? Can there be an increase in the cost in the second half?
Second half, actually, first half, itself, the cost was on the higher side. The cost of CPC and caustic soda has increased. I think the level that will be maintained on that will be slightly go down also because if we see from last September price, the CPC last September was around INR 30,600. This September end, it was around INR 42,000. It is already on the higher side. Even caustic soda has increased from INR 37,000 to INR 41,000. We are not expecting to further increase. It may slightly go down or remain at the same level.
Okay, sir. Lastly, on the coal, I think we would be ramping up our captive coal further. Can we expect that the power and fuel cost will remain in the monsoon quarter also? Earlier, we used to see a big jump in power and fuel cost in NALCO. We have now seen that moderating even in the monsoon quarter. Should this trend continue over the rest of the year?
If you see power and fuel cost compared to H1, H1, it decreased by around INR 53 crore, where the price of the coal we got a favorable of around INR 36 crore was there. Due to volume increase of power, that INR 245 crore adverse was there. Efficiency led to around INR 135 crore favorable. It was almost the same, only INR 53 crore difference was there compared to H1 last year, as far as power and fuel is concerned.
Yes, sir. So with captive coal increasing.
Remaining days also, captive coal, of course, compared to last year, this year we are increasing. Last year, it was around 2.6 or 2.7 million ton. This year, we will be doing around 4 million ton. The cost of whatever FSA coal we are procuring from MCL, Coal India, that is also not very high. With the removal of cess on the coal, we will be getting advantage on the procurement of coal from MCL, where we will be getting advantage of around INR 67 crore in H2. Almost captive coal and MCL coal will be almost same and maybe reduction of power cost will be further there in H2 with the removal of this cess.
Sure, sir. Okay. Yeah, thank you so much.
Thank you.
Thank you. We have our next question from the line of Sumangal Nevatia from Kotak Securities. Please go ahead.
Yeah, good evening, sir, and thank you for the chance. Sir, I missed a few details, so please excuse if it's a repeat. My first question is on the refinery, how much have we spent till date as of September?
Already, we have told around INR 4,500 crore expenditure has been made in our 15 refineries.
Okay. Sir, on the Pottangi mines?
Pottangi mines, already we are in the process of appointing MDO. This month, we'll be appointing MDO, and our target is June next year, we'll be starting the mines.
Okay, okay. In case there is delay in the mine commissioning, what is the plan B for the initial few months in case there's a delay?
Already, we have a separate project where alternate sourcing of bauxite is there. We are making a parallel conveyor now from our existing mines, Panchpatmali mines, which will be having a capacity of around 3 million tons per year. That will get commissioned in April or May next year. Till the actual production from Pottangi starts or if it gets delayed by a few months, the production from this alternate sourcing of bauxite will come. There will not be shortage of bauxite for the expanded refinery.
Understood, sir. From the new refinery, what will be the cost? How will the cost be different from the existing refinery? You explained on the profit. If you can just share what is the cost difference given the employee efficiency and the overall economics?
You see, in the existing refinery, we have the capacity of 2.1 million ton, which is done from four streams. Where the manpower cost is very high. In the new refinery, only one stream will be doing around 1 million ton. The manpower requirement will be less. It is with the latest technology, with the high-pressure digestion technology, where the caustic soda consumption will be on the lower side, and other efficiencies will also further increase. What we are expecting is that there will not be much increase in the prices. There will be getting advantage of manpower cost and efficiency in techno and all that. Of course, the excess expenditure on depreciation cost will be there. Interest is not there because we have not taken any loan for that. Some depreciation cost will be added to our cost.
Maybe it will be almost the same or maybe 1 or 2 thousand more than the existing price.
Okay, okay. So fine. Sir, on the coal mine, what is the production of captive coal in the first half, and how much have you bought from outside?
Our annual target is around 4 million ton. First half, we have done almost around 2 million ton, somewhere around 2 million ton, we have done the production. We have been hearing around 2 million ton, 1.96 million ton already we have done. We are on the target of doing around 4 million ton, will be completing in the year end.
Sir, our requirement is close to 6.5-7, is that right? The remaining 3 million ton annually, we have still.
Our requirement is around 7.2 million ton. Seven, 7.2 million ton. So 4 million ton will be getting from here and around 3 million ton from our FSA, that is MCL, from Mahanadi Coalfields.
Okay. And sir, entirely, we are buying from them under FSA. We are not buying anything from the option, right?
No, no. E-auction, we are not taking of late. We are only taking through that FSA.
Understood. Sir, the cost after the cess removal, you said for the captive versus the FSA, it is very similar delivered at the plant?
The delivery cost after including CES, it is around INR 400,000. Presently, the coal is being brought through FSA, and the coal being produced internally, captive mines, there is a difference of INR 300-400. After removal of this CES, INR 400 per ton. I think both the cost will be almost equal.
Understood. Understood. Just one last question. Are we buying any power from the grid, or it is entirely captive?
Actually, earlier, we used to buy power from the grid whenever there is any problem with the CPP. It is a good thing to notice that this year, we have reduced purchase power to minimum. Last year, we have purchased almost 381 million units from grid, which is a very costly one. This year, up to September, we have only used 7.7 million units because we have produced more power from our internal CPP plant. There is a substantial saving by not purchasing power from the grid, making the power movement something through our internal source.
Going forward, sir, will that go completely or remain at this level around 77,000?
Actually, last year, we have purchased the power CPP INR 186 crore was 2024, 2025, and INR 186 crore. This year, we have purchased only for INR 50 crore. So around INR 136 crore of saving in H1 is there compared to last year as far as purchased power from the grid is concerned.
Understood. Sir, going forward, is it likely to completely become captive, or is this a level which will continue?
We have got a capacity of around 1,200 MW . We normally have 10 units running, 10 units installed of 120 megawatts. We do annual overhauling of one unit, and we keep one unit standby. Sometimes, due to some issues, some breakdowns, sometimes we have to shut down the running boilers or maybe turbine, some issues are there. Only then do we take the power from grid. Otherwise, the total captive power is there.
Understood. And sir, just one last. Got it. Got it. And sir, when is the mine lease renewal due for our existing bauxite mine?
Existing bauxite mine renewal, I think it is up to 29. You'll have to find out and check it.
29.
It is up to 29.
How's the 35?
We have north and central block and south block. Central block is up to 29, and south block is up to 35, I think. You have to check up the data. You want to have the data just.
Okay. After the expiry and renewal, what is the increase in royalty cost? Which will happen?
There is a, if you see the mineral conservation rule, there is a condition that the renewal will be given for another 20 years to the government company. There is a concession in the mineral concession rule, which has been 2015, and they are recommended. There is a provision there, government company. They will be given another 20 years lease. They may charge some extra royalty that is not known to us till now. There is a certainty that we'll be getting that mines. What the premium they will be charging, that is not known till now. That depends upon the government policy.
Okay, okay. No, for iron ore side, it is 150% of existing royalty. I just wanted to know.
Yeah, iron ore.
There is iron ore.
Iron ore is there, but bauxite is not. Clarity is not there.
Iron ore after 2015, any renewal of the mines, 150% extra. The government is now thinking to save that. There is a news that government is trying to withdraw that additional royalty which they are imposing on iron ore mines. Got it. Sir, any forecast on the employee cost? That's been quite stable. What do we expect for this full year and next year, employee cost?
Yes. Employee cost, our employee cost, if you see the percentage-wise, it is around 18%. With the retirements coming, few of the senior-level people will get retired. It is not going to increase. It will reduce. Maybe it will come down to maybe 15%. Because our volume will go, reduction will be there. The volumes are also increasing. It will reduce by maybe 2-3%, not much. Because we are planning for some recruitments also.
Okay. So around INR 1,800 crore.
Sir, sorry to interrupt. We request you to please rejoin the queue if you have further questions.
Got it. Thank you. All the best.
Our next question comes from the line of Tushar Chaudhari from Prabhudas Lilladher Private Limited. Please go ahead.
Yeah, good evening, sir. Thanks for the opportunity. Sir, just wanted to know why our metal sales was lower in this quarter. Production was pretty good.
Metal sales were lower due to less demand from the market. The demand from the market was due to excessive rains. The overall demand, especially wire rods and flat products, the demand was very less. We are having the stocks, which we'll try to clear off in this month. Stocks are there. That is the reason the demand was very less.
Has it improved now in this month? I mean, as monsoon has receded, should we expect it to improve?
This month, we are expecting because we are beginning of the month. Projections are there that it will improve further.
Secondly, sir, what is our spot-to-contract ratio in alumina sales? On contract basis, we sell how much and we contract for alumina in export market?
We have a term contract and spot contract. We have done two term contracts. One term contract is for three months, and one term contract is for six months. For the next three months, normally every month we do around four shipments, four to five shipments. For the next three months, two shipments will be term, and two or three will be spot. After that, the next three months also, we will be having around one shipment of term. We are going for one month term if we get better prices. We are targeting at least 50% should be term and 50% should be spot.
Okay. When prices are higher, we usually try for higher spot, right?
Actually, now the LME is on the higher side. The forecast is that the LME will go high. When the LME is high, it is better to go for term because the term contract is linked to the LME. Now the spots are very low. The spots are on just we are getting $310, $320. Like this month itself, this month itself, whatever our term contract is there, from there we will be getting around $350. Our spot, we are getting around $320.
Okay, okay. Sir, just in connection with the earlier question, what will be our approximate cost of landed coal from captive mines? I do not know exact, but it will be less than INR 2,500?
It is around INR 1,600-INR 1,700, around INR 1,600-INR 1,700 per ton.
Okay, okay.
Landed at our power plant.
Landed at our power plant. Thank you. Thanks a lot, sir. Best of luck.
Thank you.
Thank you. Our next question comes from the line of Rajesh Majumdar from 361 Capital. Please go ahead.
Yeah, good evening, sir. I had a few questions. Sir, the aluminium total revenue for the quarter is about INR 2,880 crore. If you divide that by the aluminium sales, then the realization is about $2,900. Does that mean that the domestic premium was about 10% this quarter, or am I reading something wrong here?
Just if you can just again tell about what you want to know?
I'm seeing the aluminium segment turnover is INR 2,880 crore. If you divide by the volume, it is giving a price of INR 257,000, which is about $2,900 plus. Does that mean that the domestic premium was about 10% this quarter? Is that the right way to look at it, or is there something else?
As far as aluminum metal is concerned, and metal, most of our metal is we are selling in the domestic market this quarter. Q2, if you see, in Q2, the average LME was around $2,597, and Q1 was around $2,447. So around $150 increase in LME was there compared to Q1.
No, no, I understand that, sir. If you divide the segment revenue by the volume, it is much more than that. It is coming close to $2,900. Does that mean the domestic premium is, if you can give me the domestic realization in INR per ton for the quarter, then probably we can reconcile the number. The domestic premium seems to be very high. It is about 10%.
Rupees per ton, if you see for the quarter, I think it will come somewhere around. Thank you. Quarter two, it is coming around INR 255,000-340. Quarter two, that is the domestic realization. And H1 average, if you take H1 average, including the past quarter also, it is around INR 246,000.
That means that the domestic premium is close to 10%, sir, above the LME, the domestic premium. India premium is suggesting about 10% higher. Yeah.
Yes, yes. Because we have customs duty.
How much is the premium now? Will it be around the similar level, or will it be lower? Because normal range is about 6-7%, the domestic India premium. Will it be at 10%, or will it come down a little bit?
If you see our pricing mechanism, there are a few factors out there which decide your price. That's the import customs duty we add and some inland transportation costs from port to the location of the supplier that we also added. Everything, if you added, it is around 10%. You're right.
10%. Going forward also, 10% is the right assumption, or will it be slightly lower than this?
That we cannot disclose it now. That is our pricing policy, and we'll discuss and review that, what best possible to doing that, seeing the market condition and all of the factors.
Okay. And sir, secondly, your aluminum volume for the full year will still be 460. That means second half, we will do much more than the first half in terms of aluminum volumes.
This is the full year we are planning for 470.
470.
470 is our total plan for the full year.
On the existing pot lines, how much total volume can we go up to maximum? The rated capacity is 450, I think.
Rated capacity is 460. This year, we are planned 470. At the present rate, whatever rate we are going, we are going at the rate of 470. The 2,000 ahead of whatever we have. If everything goes okay, we will be able to do at least minimum 470.
Okay. Sir, secondly, has your alumina cost of production fallen over the first quarter? Because if you look at the inter-segment sales of alumina, the realization has fallen per ton on similar production. That means that the cost of production of alumina has fallen for some reason.
Yes. That is true. Because we have done excellent job in our technical economy front, which has given us a very good benefit by reduction for consumption of caustic, which is a major input material for our alumina. So definitely, our cost has come down compared to the first quarter.
That is sustainable according to you, that cost of production?
Yes. Answered ?
Yeah. Sir, one last question from my side is that.
Yeah, sir. What do you think?
What I was telling you, the caustic soda prices have also gone down. June 25, the price was around INR 44,000. The present caustic soda price is around INR 41,000.
How much have we gained from the JV now, from the Gujarat Alkalies JV? What is the cost of that caustic soda?
JV, whatever prices we realize from the market, the same price we take from JV also. The discovered price from the market. That is INR 41,000.
Okay. So you think that the cost saving that you got in the production cost is more or less sustainable over the balance part of the year?
Yes, yes. That is sustainable. Whatever caustic soda, specific consumption which we are getting now is around 96 kg per ton of alumina production. So that we will be able to sustain.
Okay, sir. Thank you so much.
Thank you. Thank you.
Our next question is from the line of Manav Gogia from Yes Securities Limited. Please go ahead.
Yes. Hi. Thank you so much, sir, for the opportunity. A very good evening. Sir, my first question comes for the metal segment. If I look at the aluminium EBIT for this particular quarter, that has gone up sharply on a quarter-on-quarter basis. Could you highlight the factors for the same?
You're talking about realization?
No, I'm talking about the segment results for aluminum.
Can you please repeat your question?
Yes. So, sir, for the segment results for the aluminum segment. Hello?
Yeah, please continue.
Yes. So, sir, for the segment results for the aluminum segment, we have a number of INR 1,189.37 crore and a top line of INR 2,880 crore. That's roughly a 41%.
Yes. You're right. You're right. If you compare the quarter one of aluminum segment price and quarter two, the average price for the quarter one was around INR 237,000. Where it is the quarter two, it is INR 255,000. There is a jump of INR 18,000 in price per ton of aluminum. That is one of the major factors that aluminum realization in the second quarter is better than the first.
Okay. So it's much more pricing-led rather than on the cost of production side.
Yes. I think also slightly we have increased on the volumes also. Like first quarter volume was around 1.15. Second quarter, it is around 1.19. Slight increase, around 3%, 3.4% increase. More we got from the pricing.
Sure, sure. Got it, sir. Sir, my second question is, I might have missed the number earlier. Could you give me what is the targeted sales in the second half for the alumina and the chemical business?
Alumina yearly sales we have planned of around 1.25 million tons of alumina sales. First half, we have done around 700,000 tons. The rest of the year, we'll be planning around 600,000. We'll be reaching around 1.3 million sales. Around 600,000-650,000 will be selling alumina. As far as metal is concerned, metal sales will almost be same, which is there in the first half. 226,000 we have done in the first half. If we are producing 470,000, the rest of the things should be sold.
Sure, sure. Got it. Thank you so much, sir.
Thank you.
Thank you. Our next question comes from the line of Siddharth Mehrotra from Kotak Securities. Please go ahead.
Sir, just a couple of quick questions. Sir, can you just give me some guidance on your employee cost? For example, for this year and next year. I see that they are on a declining trend. What should that number be?
Yeah, 2018. 18% more. Employee cost, we are at present, it is around 18% of the total cost. If we see the quarterly expenditure as far as employee benefit is concerned, it is around INR 440 crore. It was around INR 440 crore this quarter. Earlier quarter was also around INR 445 crore. Annual, if we see, it will go to around maybe somewhere around INR 1,700 crore. For next year, it is around 18% of the total cost.
Got it, sir. For next year, around, say, INR 1,650 crore, that reduction seems plausible or higher?
Next year?
Yes, next year. This year, you are saying INR 1,700 crore?
Next year, we are going to add some NPL, but that cost will be offset by our volume because we are adding new facilities. Retirements will also be. Retirement is also there.
200 retirements, sir.
Annual around 200 retirements.
Go slightly, go to around maybe 16%. 10-15% will be the total cost.
Okay. So basically, you are saying that we can install some sort of declining trend there as well, right? Is that understanding correct, sir?
Yes, yes. Declining trend, of course, will be there because whatever our employees who are retiring, they are on the highest slab of their basics and salary. Whatever we are recruiting, they are on the minimum scale. The average salary will go down.
Understood. Sir, one small clarification. In an earlier earnings call, we had said that we had increased our alumina inventories. In this quarter, I see that our alumina sales are much higher. Was there a liquidation of these alumina inventories which sort of led to much higher alumina sales this quarter? Or was it some other reason?
Alumina sales? You're talking about alumina inventory?
Correct, correct, correct. Was there a liquidation of this inventory which led to much higher alumina sales this quarter?
We have increased the production of calcined alumina from H1 production compared to last year H1. It has increased by 31%. Last year H1, we have done around 8.84 lakh, and this year H1, we have done around 11.61 lakh. The production has increased substantially. That has led to the increase in the sales.
No, sir, I understood that point. For example, when I'm talking about alumina sales, you're giving me a full year guidance. In the second half, you're saying that we will do 600,000-650,000 tons. In the first half, we've done 700,000 tons. What I'm saying is that this number is higher because of 2Q, which means that there was some sort of inventory sales from alumina as well contributing to this.
That is one more thing. It is not that earlier inventory was there. Once our stock of alumina in March 2025 was at the minimum level. Whatever sales we have done is from the production. Because you see, we have done the alumina production of around 161,000 tons. And metal production, cast metal production was 234,000. 234,000 means for that, we require alumina of around 546,000. 460,000 from 1,163,000 reduce 460,000. That somewhere around 700,000, it will come. 700,000 we have sold.
Got it, sir. Got it. Thank you. That's all. Thank you.
Thank you. Ladies and gentlemen, we will take that as our last question. I would now like to hand the conference over to Shri Bharat Kumar Sahu, Company Secretary, NALCO, for closing comments. Over to you, sir.
Yeah. Thank you, Operator. Thank you, Systematics Group, for taking keen interest on the financials of NALCO. We always solicit this kind of response and this kind of support from your end, year-on-year basis. Thank you all for giving time to NALCO and participating in this conference call. Once again, thank you.
Goodbye.
Thank you.
Thank you.
Thank you. On behalf of NALCO, we conclude this earnings call. Thank you for joining us. You may now disconnect your lines.