Ladies and gentlemen, good day. Welcome to the Q1 FY 2027 earnings call of National Aluminium Company Limited, NALCO, conference call hosted by Systematix Group. 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 the conference call, please signal an operator by pressing star, then zero on your touchstone phone. I now hand the conference over to Ms. Shweta Dikshit from Systematix Group. Thank you.
Over.
Over to you.
Thank you, [Sharindra]. Good morning, everyone. On behalf of Systematix, we welcome you to the Q1 FY 2027 earnings conference call of NALCO Limited. I would like to thank the management for giving us the opportunity to host this call, and I now hand over to Mr. Bharat Sahu , Company Secretary, NALCO, to discuss the company's financial and operational performance. Over to you, sir.
Namaste, good morning. Warm greetings from NALCO, a Navratna company under the Ministry of Mines. Let me, at the outset, introduce our Functional Directors sitting in this earnings call. In the middle is our CMD, Shri Brijendra Pratap Singh.
Good morning.
Sitting next to him is Director of Finance, Shri Abhay Kumar Behuria.
Namaskar.
Sitting next to him is Dr. Tapas Kumar Pattanayak, our Director of HR.
Good morning to all.
Sitting next to me is our Director of Production, Shri Pankaj Kumar Sharma, sir. I am Bharat , the Company Secretary and Compliance Officer. On 31 July evening, NALCO Board considered and approved the financial results for the first quarter of FY 2027. NALCO has already registered a robust performance in the Q1. 1 presentation is already uploaded on the website of the stock exchange, also on the website of the company. It is a robust performance. I will request our CMD, sir, just to highlight some of the key financials of this Q1. Then we'll start taking the calls. Questions from your side, please.
Good morning. At the outset, our performance for the Q1. Already the presentation is loaded. I would like to give a few highlights of the Q1 performance. Q1, our overall total income, which grew if we compare to previous year Q1, from INR 3,930 crore to INR 5,400 crore, around 39% growth Q1 to Q1, same if we see CPLY. Earnings, if we see, PBT grew by around 88%. EBITDA grew by around 78%. There has been substantial growth both in revenue collection and both in profitability of the company. If we see the highlights of the performance, physical performance also has been very good. Whatever targets we have set in the beginning of the year, almost all targets we have achieved. We have achieved best-ever production in bauxite, in hydrate production, and in power generation. As far as Q1 progress is concerned, best Q1 in all these areas.
Financially, if we see, best-quarter performance we have done as far as our revenue generation is concerned is the ever-best quarter we have done. As far as profitability is concerned, best-Q1 profitability we have achieved. The major contributors have been, of course, our internal improvement in the volumes of production. Whatever targets we have taken, almost we have reached to the peak of the volume in all the areas. If we see refinery, if we see our metal production, all the areas. We have targeted at least 5%-10% more than the capacity utilization, whatever we are going to do, more than the rated capacity we have targeted this year. As far as other areas are concerned, we are also targeting to reduce our costs, increase our efficiencies, which is in our hand, that is increasing volumes and reducing the costs.
We are also going for some valued products for our future expansions. As far as expansion is concerned, fifth stream refinery are going to come this year. Also we are targeting to expand our smelter capacity, for which we are going for CPR mixing capacity, going ahead with the various milestones, which we'll be discussing in the presentation. Once again, thank you, Systematix Group, for organizing this conference call.
Ma'am, over to you. We can now request all our esteemed participants to come forward with their questions. Thank you.
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star. Press one, press star. Participants are requested to use handsets while asking a question. We will wait for a moment while the questions are asked. Thank you, Bharat Sahu.
The first question is from the line of Mr. Amit Lahoti from Aditya Birla Capital. Please go ahead.
How is the commissioning process moving there, and can we still produce 300,000 t in the current fiscal?
Our 5th stream refinery, we have June onwards, we have started the commissioning. A few of the decommissioning activities we have started. Few of the packages, almost around 50, more than 50 packages are there. Few of the packages' mechanical completion already has been done, and the trial of those packages are under process. Few of the packages are left out. Our target is by September end, we have to complete mechanical completion of all these packages, do the integrated trial first, that is, the water run is to be done within the packages. After that we start the actual production process, which will take maybe three to four months to stabilize and reach to the level of 60%-70%. This year, our target was that we will be producing around 200,000 t of alumina from this refinery.
Even if we start the actual production from November, December onwards, after that also we will be able to achieve those kinds of figures from the fifth stream refinery, that is around 200,000 t of alumina production.
Right. Why has there been a delay? Because earlier we were planning to start producing from June onwards. As we are seeing around six months of a delay, any reason around it?
We were planning to start the commissioning activity from June onwards, after that complete it in next three to four months. Of course, the mechanical completion, which was supposed to be done by June, July, may be getting delayed by two to three months. This is a big project. It is very difficult to exactly pinpoint the date of commissioning and all that, and it's a chemical process plant. Now, maybe by September end we are targeting the mechanical completion will be there and will start. There is almost two to three months delay is there, not very huge delay is there.
Sure. Okay. My second question is on employee cost, which is gone down below INR 1,600 crore if we annualize Q1 number of INR 395 crores. Is it part of the superannuation plan that you guided in Q3 FY 2026, that you were going to affect senior people of around 200 to 50, with the cost saving of INR 70 to INR 80 crores? Is it same which is coming now?
Good morning. Myself, Abhay Behuria, Director of Finance. It's a right question. Why are our employee costs going down? If you see the CTC of our last year Q3 FY 2026, our average CTC was around INR 36 lakhs. In this quarter, it is around INR 33 lakhs. There is a reduction of INR 3 lakhs almost. That is because, rightly you have said, that is because of superannuation of the high-paid employees and induction of the employees at the entry level. That is the one reason. Second reason is we have made some provisions last year towards retirement benefits, that is, provision towards actual evaluation of leave, gratuity, and which was on the higher side. This quarter we need not to provide that. Another area is ERP. ERP we have made a provision last year, which is not required to be provided this year in that ratio.
That has reduced our cost, we expect that this trend will continue in the next three quarters also.
Okay. For the full year, we can still see this number around INR 1,600 crore. That is right?
Right. Right. In the latter part of the year, in the last quarter four, there may be some impact of pay revision, 1 January 2027 pay revision is due. The last quarter, there may be some increase in 15% additional. Otherwise, two quarter, second and third, the cost will be in this line also.
Understood. Thank you so much.
Thank you, sir. Next question is from the line of Mr. Aditya Welekar from Axis Securities. Please go ahead.
My question is with respect to our alumina sales volume. For FY 2027, you have guided 25 lakh tons of alumina production. Anything in terms of sales volume, that number fluctuates a lot. If you can guide on the full year volumes for FY 2027.
This financial year, last year we sold around 14 lakh tons of alumina. This year we are targeting 16 lakhs. Whatever 2 lakhs extra alumina we are trying to produce from fifth stream, it will be added to our sales volume. 2 lakhs extra we'll be selling this year.
Yeah, understood. The second part is, we have seen now that the aluminium prices have come down. Going forward in Q2, do you foresee any raw material cost pressure which will persist? Because we have seen that in the earlier quarter you have guided that there is some cost inflation on CPC and other raw materials. Will it impact our margins going forward as the aluminium prices have cooled down?
Aluminium prices, you see, in the first quarter average we got around $3,500, $3,600, yeah, $3,700 of LME. Now it has come down to around $3,200. Raw material prices, of course, has increased. You see caustic soda prices, last year average was around INR 42,000. In Q1, our expenditure was around INR 45,000 per ton. In Q2, it will become around INR 49,000. Of course, caustic soda prices are going to go up by around INR 3,000, by INR 3,000-INR 4,000 as compared to Q1. CPC prices also has gone up. INR 53,000 was, yeah, INR 44,000 was last year, it has gone to INR 66,000-INR 70,000. These are the two major areas, and also HFO. HFO price, which was INR 46,000 last year, it has gone up to INR 75,000. This has increased our overall cost of production by around INR 15,000-INR 16,000 per ton of metal.
These three areas, caustic soda, CPC, and HFO, these are the three areas where our cost has also aluminium fluoride by some amount. Of course, around 10%-15% increase in the full raw material prices are there, which is increasing our cost by around INR 15,000-INR 16,000 metal prices.
Anything which can offset that? Means we have seen just recently alumina prices have increased to $350 per ton. Is there any scope to offset that with lower pool power cost, or you think that the margins would take slight hit?
Alumina prices, what we expected in the beginning of the month year was around $ 310 to $ 320. Of late we are getting around $ 370 alumina prices. That is because in Russia also, Rusal and China, two of the refineries, due to red mud issues, they have reduced the production. The bauxite prices in New Guinea has increased slightly. That's why the alumina prices, which we were expecting that it will be somewhere around $ 320, we are getting around $ 370. That will offset somewhat raw material what is increased in the raw material cost. Because raw material has given us an expenditure burden in Q1 of around INR 120 crore.
INR 200 crore.
INR 200 crore. INR 230 crore in extra due to increase in the raw material prices. Alumina prices are the prices which we are expecting it will, if we remain at the level of $ 370, then that will offset the input raw material cost.
Understood, sir. Understood, sir. That's it. That's it from us.
Thank you. The next question is from the line of Pinakin from HSBC. Please go ahead.
Thank you very much, sir, for this opportunity. Sir, I have a few questions. The first is, you highlighted $370 per ton is your alumina realization you are getting currently. What was the alumina realization you got in Q1, sir?
Can you repeat the question? Last line.
The alumina realization in Q1, quarter one.
Q1. Q1, our average realization was around $323 alumina.
Quarter one cost of alumina, sir, is quarter two cost higher or back?
Little louder. We are not able to.
Voice is cracking.
Not clear. Not very clear.
One second. Alumina cost of production, sir, will it be higher in quarter two versus quarter one?
In quarter one, our cost of production, if you see, you are talking about alumina or metal?
Alumina. Alumina.
Alumina cost normally range between INR 21,000-INR 22,000. Last quarter it is around within that range only. The second quarter, since we have observed all the input cost increase in the 1st quarter, and similar pattern of cost, price will be remain in the next quarter. We don't think our cost will be increased. Rather, our cost will be within that range only, around INR 21,000-INR 22,000 per ton of alumina. Rather, we'll be getting advantage in the price, because CMD, sir, has already explained that the next quarter we are going to get incremental price of around $50 from alumina.
Got it, sir. Got it. My second question is, sir, you highlighted metal cost of production increase of INR 15,000 to INR16,000 a ton. Was that cost of production increase already seen in quarter one, or will that increase come in quarter two versus quarter one?
No, it is already. It was already expected because we are knowing that raw metal prices are going to go up. These three raw materials, that is caustic soda, HFO, and CPC, so that was almost expected, and the similar kind of cost will continue in Q2 also.
Okay. Similar kind of cost will continue. Got it, sir. Sir, my third question is, you highlighted LME prices which have moved. How are the domestic aluminum premiums? You highlighted previously that they change with a lag. Have they increased in recent times, or you see the premiums increasing in the domestic sales?
Premium has increased. Our earlier premium was around $60. It has gone up to around, with the tender last, around $110. $110. Premium has increased by around $50.
Got it. Do you expect this to increase further, sir?
No, no. That premium increase was due to that war situation in the Middle East. Since the war situation is easing out, we are expecting that it may remain same or maybe it may go down a little bit.
Got it, sir. Sir, my last question is, because of the war situation in the Middle East, were any of your export shipments impacted, which will now normalize either in alumina or aluminum?
Yeah, few of the shipments. Like one shipment was earlier ordered. Of course, that was before the war. It was ordered at $390 also. That has got materialized. We are getting better relation in that. As far as other shipments are concerned, other shipments, whatever is getting ordered, they are going. No other pending shipments are there.
Got it. Got it. Thank you very much, sir.
Thank you.
Thank you.
The next question is from the line of Mr. Vikas Singh from ICICI Securities. Please go ahead, sir.
Good morning, sir, and thank you for the opportunity. Sir, Q1 usually being a monsoon season had traditionally been weaker, especially on the coal input side. Just wanted to understand, had we have sufficient coal inventory, including the captive this time, and any one-off cost escalation or any disruption we have experienced so far?
As far as our coal hand is concerned, here in Angul, that is for our smelter, there we are having sufficient coal because that coal we are getting from our captive source. Around, say, 60%, 70% of coal we are getting from the captive source. Their issues are not there. Of course, in our refineries, the coal stock is on the lower side. Coal stock we have to maintain at the level of maybe 10 to 15 days. Now it is around two to three days.
That is because of the restriction given by the government, the priority of the rakes. There, we are heavily dependent on the rakes from the railways, and the priority is given to the power plant. There some issues are there. We are taking it very aggressively with the Indian Railways and our ministry. Some improvement is there, since now the restrictions, summer is over, restrictions will come down. We are expecting that these stocks will also improve in the coming days.
As long as the rake availability for the shipment is concerned, there's no problem so far.
No, that for that shipment, our own rakes are there for the dispatching calcined alumina. For that, no issues are there. We have got our own BTAP rakes. For that, no issues are there.
Got it, sir. Sir, if I could just ask, we keep talking about the going in Baltivana, 0.5 m illion ton aluminum.
Mr. Vikas Singh , your voice is breaking.
Is it better?
Yeah, it is better.
Hello?
Please.
Yeah. Sir, second question pertains to week is about our 0.5 million ton aluminium plant CapEx. Could you give us some highlights at what stage of board approval these plans are when we will start on this and the CapEx? Any?
Sir, for this 0.5 million ton smelter plant, you had developments as far as as of date, as you see. We have already got technology supplier finalized. That is EGA. EGA. We are going to sign technology license with them this, maybe this month by 10th or 15th. DPR making is under process. The consultant is making the DPR. Our target is next three to four months we will be ready with the DPR and get the board approval maybe October, November for the DPR for setting up this 0.5 million ton smelter and also 1,000 MW power plant. After that, maybe we will take eight to nine months to order the packages. By next year, August, September, we should order all the packages and start the groundwork maybe next year, October, November.
From there, it will take three to three and a half years to set up this plant. The timelines which we have given to the ministry and our internal timeline is by December 2030, we have to complete this plant along with the power plant. As far as the power plant is concerned, power plant, we have done one JV agreement with Neyveli Lignite for setting up this power plant so as to reduce our CapEx and to have the raw metal security, that is the coal. NLC is having the coal mines here itself in Talcher District. The coal supply will be from there. That will be good for this power plant. This power plant DPR is also under process. At the same time, both will get ordered and get commissioned by 2030 end or 2031 first half.
CapEx is concerned, the overall CapEx expenditure will be somewhere around INR 25,000 crore. This will start from FY 2027-2028. The peak will be FY 2028-2029, FY 2029-2030, and FY 2030-2031. This will be the two to three years where this CapEx flow distribution will be there. This year, for that project, no major CapEx will be there. Of course, technology licenses, we have to give something, maybe INR 300 crore, INR 400 crore. The major CapEx will be coming next financial year onwards.
Noted, sir. Sir, just one clarification. The shipments or the exports which we do to Russia, is it on a dollar denominated or is in the Russian currency? Whatever the dollar denominated sales we do in the export market, we book the dollar into rupee at the time of shipment, right?
No, whatever shipment our exports are going, that is on a dollar at the time of ordering. When our tender is floated, we do the spot tender, that is the dollar rate as of that day.
Okay. The booking happens or the sales got booked at the time of shipment, right?
Booking, actually, we do the spot tender, the date of opening the spot tender, at that date, whatever the dollar prices are there, that is finalized.
Noted. Noted. Understood. Thank you, sir, and all the best for future.
Thank you.
Thank you. The next question is from Mr. Manav Gogia from Yes Securities Limited. Please go ahead.
Hi, good morning. Thank you so much for the opportunity. Sir, my first question comes on the captive coal mines. We were targeting a 4.8 million ton production for FY 2027. Can you just elaborate on where we are in the EC process for, you know, our mine expansion?
Already, the mining plan approval we have done, or mining plan approval is to be done from the board. This board we have done the mining plan approval, now we are applying for the EC. Next maybe 2-3 months we'll be getting the EC. Already we have started the production, and 4.8 million ton, we are sure. We are going at the rate of 4.8 million ton monthly breakup, whatever we have done. Next 2-3 months we'll be getting EC from MoEFCC. There are no major issues in that.
Oh, okay. That's good to hear. Could you just give me what was our total coal production in Q1 from our captive mines?
Q1 was 11.04 lakh ton.
11.04?
Because initially, what happened, initially 4-5 days, in the beginning of Q1, five days, the production from the mines were not there. There were some technical issues. Now we have ramped up the production, and the subsequent quarters we'll be managing those, whatever shortfalls were there.
Oh, okay. Can you just repeat the number once more?
11.04 lakh ton.
11.04 lakh. Okay. Sure. Sir, my second question is, you know, now for Pottangi mines, we have already appointed an MDO. When do we see the production to take place, or is it already started?
Pottangi mines, actually, one, we have already ordered the MDO. For going to the mines and starting the production, one road is to be made, 8-km road. For making the road, tree cutting is to be done. We have, along with district authorities, some resistance is coming there. Some activists and some resistance are coming there. District authorities, two-three times we have tried along with the state government, police force, and all that. We are trying to mobilize the locals there along with the MDO. I think in this month, this month itself, that is in the month of August, along with the authorities, we will be again going there for making the road. Once the road making will take around maybe 15-20 days, that may, so we are targeting maybe September, October onwards. October onwards we'll start the production.
Okay. Sure, sure. That is quite helpful, sir. One last question I had. As of the, you know, March 2026, our total employee count was roughly 4,880. What would the employee count be as of right now, or, you know, as of Q1 end?
4848.
4848
Almost. As of now, it is 4848.
Okay. There could be another 150 to 170 employee reduction more by the year-end, right?
Oh, yes, sir. Every year we will be reducing around 400. 170 to 200 every year reduction will be there in coming 3-4 years.
Sure, sure, sir. That is quite helpful. All the very best.
Thank you.
Thank you, sir. The next question is from the line of Amit Murarka from Axis Capital. Please go ahead.
Hi, hi, thanks for the opportunity. You mentioned the mechanical completion of the alumina plant in September and roughly additional 200 KT production, right? Next year, can we assume the full run rate of this capacity?
Oh, yes, sir. Next year onwards we have to do. We will be going to 1 million ton production from there, and 2.2 million ton already we are, 2.2 million ton, 2.3 million ton. We are doing from the existing. Maybe we'll be going to 3.1 million ton, 3.2 million ton next year onwards.
Sure. Also on this local market premium for aluminium, how does it really work? You enter into some contracts once the premium is fixed, or is it, like, goes with the spot market itself?
Actually, we do export tender. Some export tender premium that is loaded on the domestic pricing market that we do. That is loaded on the domestic pricing. LME. Domestic pricing is based on the LME.
When you sell in the local market, the premium that you book or charge customers in the local market is also based on some benchmark, let's say MJP benchmark, something like that, or you fix it?
It's not on the MJP. We do what we process we follow is we do one export tender. In export tender, whatever premium we do, that premium is fixed for next 3-4 months unless and until we do the next export tender. Suppose we did an export tender last month, we got a premium of $110. That premium will be loaded on the domestic pricing for next 3-4 months until we do the next export tender and we discover the premium.
Okay, okay.
You were talking about the metal price or alumina?
Aluminium. Aluminium. The sales that we make locally.
That is our policy. What CMD sir has explained, that is our policy. We have a structured policy for fixing the aluminum price, and there are other factors also there. One factor is premium. Whatever premium is discovered for tendering, export tendering, that is added to our aluminum price domestic supply. Okay?
Sure, sure. Got it. It is revised based on every tender that you do?
Every tender, yes. The frequency of tender depends 3-4 months, we do normally.
Right. What is the CapEx outlook now for FY 2027-2028, if you could provide the numbers?
Our target is INR 1,500 crore. Maybe we'll be crossing that. We'll be somewhere ending up with around 26-27, you are talking, no?
Yeah, this year as well as next year.
This year it will be our target is around INR 1,500 because most of the payments for system is done. Major capital expenditure is not there, but still we'll be doing somewhere around INR 1,500 to INR 1,700 or INR 1,800 crore. Next year onwards it will increase because our expansion of the smelter will be there. Next year, how much we have planned?
Next year we have planned somewhere around INR 500.
INR 2,500 crore. INR 2,500 crore maybe in 2027-2028. After that, it will go to maybe INR 4,000 crore-INR 5,000 crore. After next, maybe INR 6,000 crore-INR 7,000 crore. We have done the phasing, the major expenditure will come from the smelter expansion and power plant expansion.
Sure. Got it. Also captive coal, I think earlier you had mentioned about 4.6 million ton production this year. You seem to be on track on that?
Yes, yes. Captive coal, last year we did 4 million ton. This year we are targeting 4.8 million ton because 20% increase is allowed. For that, all permissions and all that under process, on a monthly basis, we are producing at the rate of 4.8 million ton and will be achieving that at the end of the year.
Sure, sure. That's it from me. Thank you.
Thank you. The next question is from Sumangal Nevatia from Kotak Securities. Please go ahead.
Good morning. Thanks. Just continuing on the previous question. One on the CapEx, can you share one cue how much we spent? Then for the expansion, I just want to know, the power CapEx will happen in the JV, will we be contributing only to the amount of equity, which could be maybe around 20%-30%? Just if you can explain how the power expansion CapEx will happen.
Yes. Our CapEx plan, what CMD sir has already explained, smelter we are going to do EPC more, for power plant we have JV with NLC, we'll be doing both. Okay? Contribution to total expenditure towards our CapEx for up to 2030-31 will be around INR 24,000 crore. INR 17,000-18,000 crore on smelter, INR 6,000 crore towards contribution for this power plant. 1,080 MW power plant through JV. The cost will be, total cost will be around INR 12,000 crore, INR 6,000 crore from our side and INR 6,000 crore from NLC because 50%-50% JV is there. In power plant, we have a debt-to-equity ratio of 30%-70%. If you follow that, our equity contribution will be lower. It is around INR 3,500 crore. Our share will be 17%-60%. Balance will be financed through bank. Through our NALCO and NLC will be the guarantor because this is a new JV.
We'll be the guarantor, the money will be taken from the bank. If you see otherwise, if you see our fund base, if you see our balance, it hasn't dead. We have a fund base of around INR 10,500 crore cash. Every year we are adding INR 3,500 crore after paying our dividend and all our CapEx, which is regular. If you see that area, we need not to take any money from the outside because we have sufficient balance. Since we have entered into agreement of JV agreement for power plant, the power plant will be financed by that company, JV company. Equity participation will be 30%, 70% will be taken from the bank. Balance money which we have will be utilizing for our expansion project of smelter, other project we are also considering that will be entirely through equity because we have sufficient balance.
The power plant will be 70/30. 30 equity, debt-to-equity ratio 30/70. That is the present proposition, and we are going to go by this philosophy.
Understood. Sir, for the power plant, INR 12,000 crore for 1,000 MW, I mean, generally the thumb rule is INR 7-8 crore per megawatt. Why is the cost so higher?
It is not, sorry, 1 MW , I think INR 10 crore one megawatt.
It will be INR 10,000-INR 11,000 crore. It is not higher. We are going to set up a 1,080 megawatt power plant.
Okay. Understood. Sir, what you said is the cash balance as on 1Q, net cash INR 10,500?
Yes. As on 30th June 2026, as on date, it is INR 10,500 crore.
Understood. In one Q, how much did you spend for CapEx?
This year or you are talking about the subsequent?
Only in the first quarter.
First quarter, I think INR 350.
Understood, understood. I wanted to understand that on the previous question, on sales of metal, you shared it is, I mean, the premium is decided as per the export tender. The domestic price, just to clarify, it is the LME plus the customs duty plus whatever we get as a premium in the export. Are these three components there?
There are some handling charges and some stockyard charges, something are also added on that. On that basis, transportation charges. From port to our yeah point and the port to the customer point. You have a calculation module. The three factors is there. You have rightly mentioned that is the export import duty plus premium plus handling charges and plus freight equalization. What freight customer will have paid to their location, what they will be paying from our location to them.
Okay. Understood. Sir, can you share what were these three components for Q1? LME we know, the breakup of the realization we.
Capital is our domain. Our domain, you can get it from our website. I think pricing policy is there. That policy we need to see whether it is a classified one or not. We can share or not.
Okay, okay. That's fine. Sir, just one last thing. On the aluminum metal, you said INR 15,000 to INR 16,000 increase in cost. This is.
Cost increase is INR 15,000.
Yeah, INR 15,000. Yeah, INR 15,000 to INR 16,000. This is with respect to fourth quarter or with respect to last year as an average?
Last year average. Last year average was INR 156, INR 157 around INR 157,000. This year average first Q1 is around INR 170,000.
For the, as per the today's trend, Q2 should be what, sir?
Q2 will slightly increase because CPC prices and caustic soda in Q2 will be slightly higher. Not much higher. Maybe it will go to INR 172 or INR 170, INR 172. It depends on how much efficiency we are achieving.
Understood. Just one last question, sir. I mean, when you are adding around less than 1 million tons of captive coal this year, what is the cost saving? What is the difference between the cost of captive coal versus what we are replacing? Linkage or e-auction coal?
Our cost of captive coal, which we are sourcing from our own mines, it is around landed cost, it is INR 1,500 per ton. If you compare this cost with our coal from, there are two types of coal we are taking from the Coal India. One is agreement FSA, linkage fuel supply agreement. Another is through e-auction. FSA coal is around, almost same range in INR 1,600-INR 1,700. If you see that is e-auction coal, it is varying from INR 3,500-INR 3,600. There is a difference in e-auction coal. If you see the FSA coal, FSA coal we are not regularly getting because of the rack supply. The e-auction coal is too higher than our captive coal. There is a great advantage between e-auction coal and our captive coal. Okay. That is INR 1,500 almost.
Okay. Sir, last year, what is the breakup of our coal? How much was linkage and how much was e-auction?
Last year, if you see linkage.
Yeah, linkage and e-auction.
Linkage and e-auction. Around 55, 45.
Linkage and e-auction.
Yeah. Linkage and e-auction.
We are talking about because.
Of total 7.2 million. 4 million is our own. We are taking 3.2 from Coal India. Out of 3.2, linkage and e-auction [Foreign language] linkage? Linkage was around 34 million. 30 lakh from our CPP and 10 lakh from linkage. And e-auction coal, it was around 1 million. 1 lakh. 10 lakh. Just we'll check up the data and let you know.
Sure, sir. That was my last question. I'll wait for the answer and I'll join back the queue. Thank you. Thank you, sir.
Thank you. The next question is from Mr. Digant Haria from GreenEdge Wealth. Please go ahead.
Hi sir, thank you for the opportunity. Sir, just one, two questions I had. You know, one was on the aluminum metal price outlook, like, you know, and because, you know, the Middle East war destroyed one or two big production factories. You know, when they come back on stream, you know, what happens? What is your expectation of aluminum metal prices? That's number one. And number two is that, you know, in recycled aluminum also, India is seeing a lot of investment. You know, like, does NALCO have any plans and, you know, can that impact our sales going forward two, three years later? These are the two questions.
Metal prices, as of now, it is $3,200. LME is $32. What forecasts are telling CRU and Platts and all that remaining part of the year, that will remain somewhere around $31, $32.
We are also expecting somewhere in between $3,000-$3,200 will be the LME in the remaining part of the year. Because whatever smelters are supposed to come in the Middle East, that will be coming maybe by end at the Q4 of this financial year. Because these smelters will take some time more, six, seven, eight months more. Supply restrictions, there are the projections are there. There will be a deficit of around 0.88 million ton of metal in the international market. If you see the production and consumption pattern, there is a deficit of around 0.88 million ton. LME will be there somewhere around $32 and.
Got it, sir. Got it.
Sir, just on the recycling is concerned, we are talking about recycling.
As far as NALCO is concerned, recycling basically is done for the secondary producers who are making small quantity. Since we are a major producer, we don't, we don't go into a recycling because that also disturbs the quality of the metal we produce. In aluminium sector, the quality of the metal is very important, the purity of the aluminium. Whenever the recycling is done, the quality assurance is not there. So our plans for recycling is not there.
Okay.
Okay, sir.
Okay. Thank you so much.
Thank you.
Thank you. The next question is from Mr. Akhilesh Kumar from Emkay. Please go ahead.
Hi. Hi sir, thanks for taking my question. My first question is that for this quarter, did we have any LME linked contracts or alumina? If yes, how do we stand for the quarters ahead of us?
Just we could not get you. If you can repeat your question.
Yes, sir. My question is on, did we have any LME linked contracts for alumina for Q1 for 2027? If yes, how do we stand for the quarters ahead of us?
Term contract.
Term contract in Q1.
I think in the beginning, one or two shipments started. Now, as of now, last two, three months, we are not having any. That we call as a term contract, which is linked to the LME. That is not there. We had a few tenders in which the percentage was very low. It was coming around 10% of the LME. That's why we canceled that tender. Spot prices we are getting better.
Is it fair to say that for FY 2027 also, for the remaining of the year, we won't be having any term contracts?
Actually, we go for the tender. We will be doing some tender. If we get better prices, then only we'll go. As of now, if we are getting $370, and the percentage wise, if we get only 10%, 11%, so around 3,200 LME, that will come to maybe around $320. We don't order that. It totally depends on we'll be doing tender. If we get the better prices, around 12%, 13%, 14%, then only we'll book the order.
Can you sir also explain how we are getting this $50 of premium versus our Q1 average, which you said was around $320 for alumina? Now for this quarter, you are expecting it to be $370. Why this differential is there?
Whatever premium I was talking, that was for metal, aluminium. Alumina, we are not, alumina, whatever we are selling, that is a spot tender. Fixed price. Suppose we are doing a spot tender, and on that spot tender, whatever, suppose we are getting $370 per ton, or $350, whatever, that is a fixed price spot tender for shipment. That premium I was talking was for the metal. For aluminium, whatever aluminium we are selling in the domestic market, on that we load some premium. That depends on whatever export. We do some export of the aluminium also. Some metal export also we do. We do 500,000 t every month. In that export tender, whatever premium we are getting, that is loaded to the domestic customer.
Sure. Is it fair to say that for second quarter, aluminium realizations could be close to $360, $370 for NALCO?
Yes, sir. Already this month, July, we have spot tenders. August spot tender also somewhere around $370 we are getting. Last spot tender we have done 23 batch. That also we got $380. Q2 average $370, I think we'll be getting Q2.
Okay, okay.
What we have mentioned, the first quarter was around $323, the next quarter we'll be expecting $50 more. That is through spot tendering or term contract, whatever it is. We are expecting that. The price what is now prevailing, it will give us more $50 more than our earlier realization. Okay, fast forward.
Got it. Got it. My sir, second question is on the bauxite to alumina production. For this quarter, we have used kind of 3.2 t of bauxite for one ton of alumina, which is efficient if we compare it to the last few quarters, which was at around 3.5 t of bauxite. Any particular reason for this improvement? Can we expect this to sustain ahead also?
It totally depends on the quality of bauxite we are getting from the mines. Basically, we have started a few new places there in our mines. When the quality of bauxite is good, the per ton consumption of bauxite, it goes down. In the coming days, because we are going to start south block two also, where we'll be getting better quality of bauxite. Our north block, which was a very old block, that has almost exhausted. We are starting some new phases where the bauxite quality will be better. Average specific consumption of bauxite will be getting better.
Sure, sir. Thank you so much. That's it from me.
Thank you. The next question.
One query, just one query was there on the linkage coal and all that. Our Director Production is there. He is going to answer that.
Basically, for our CPP, we are utilizing linkage coal and local D and E coal. Last year, we have utilized 47.16 lakh coal from linkage through MCL and local D and E, 40 lakh. Also we are taking coal from E through e-auction for our alumina refinery. Through linkage, last year we purchased 11.24 lakh through linkage and e-auction coal around 7 lakh. Approximately 40% coal of total coal used in refinery is taken, purchased through e-auction, and balance is through linkage. Thank you.
Thank you, sir. Thank you. We have next question from Pathanjali Srinivasan from Sundaram Mutual. Please go ahead.
Hi sir, thank you for the opportunity. I just wanted clarity on one of the questions.
Excuse me, sir, please be a little bit louder, sir. Please.
Yeah, am I audible now? Is it better?
Yes, sir.
Good morning. Yeah. Yeah, good morning, sir. You had mentioned about this premiums at, for metal at around $110 currently. Can you tell us what was it in the last time when you had done the revision and what is the impact between then and now?
That was last time we have done around five, six months back. At that time we got the premium was around $60. Somewhere around $60.
Okay. Based on what you're saying, your premium has only increased. I think in your presentation you had mentioned something like premiums are declining or premiums are likely to reduce. What is premium? Can you tell me the difference between the two?
You see, the premium totally depends on the demand supply. If the demand is more, the supply is lesser, the premium we get better. Last time when the tender we did, at that time the supply restrictions were there due to this war situation. Since the war situations are easing out, even the smelters in the Middle East, they are trying to increase the production. In the subsequent months when this eases out, the premium will go down.
Got it, sir. Just one question. Your new alumina refinery that you are starting, what will be the difference in terms of cost of production versus your current plants? The current plants are much older.
Cost of production in the expansion unit you are talking?
Correct.
We have calculated for our expansion unit history, the cost of production will not be much high because our average, if you see our current cost of production of alumina, this last year it was around INR 20,000, this year, first quarter, we have got around INR 22,766 because of the increase in caustic soda and fuel oil. That is HFO. These were the two major contributors that have increased. In our new refineries, that is a 5th stream refinery, the advantage which we will be getting is that is a pressure digestion, where the caustic soda consumption will be on the lower side. The caustic soda consumption in our existing refinery, which is around 103 kg-105 kg per ton of alumina production, that should go down to around maybe 85 kg-90 kg per ton of alumina consumption.
That will reduce our cost by maybe, I think, by INR 1,000 or INR 1,500 per ton as far as alumina cost is concerned. Other areas like manpower cost and all that, because that is a big unit, one line producing around 1 million ton. From four lines in the existing refinery, from four lines we are producing 2.1 million ton. The fixed cost, that is the manpower cost, will also be on the lower side. Of course, the interest is not there. The depreciation will be loaded. Some depreciation will be loaded on the cost. What we have calculated, the overall cost of the existing refinery and the new refinery will be almost same. New refinery also somewhere around INR 22,000-INR 23,000 will be the cost coming.
Got it, sir. Thank you, sir.
Thank you.
Thank you. The next question is from [Parvani Dutta]. Please go ahead.
Sir, I just have one question, just a clarification. Our current alumina capacity is 2.1 million ton, right?
Yes, yes.
Sir, after expansion, how much is this going to become?
You see, our current capacity is 2.1, but last year we produced around 2.3. We have done 0.2 excess of our capacity. With expansion, one more, 1 million ton will be added. After expansion, we are targeting the rated capacity will be 3.1 million ton, but we'll be targeting around maybe 3.2 or 3.3 million ton
Sir, this comes up when this extra 1 million ton capacity?
1 million ton, this year only 0.2 million ton will be added. From next year onwards, that is 2027, 2028.
Okay, 2027, 2028, we will have full 3.1 million ton.
Yes, sir.
Obviously we'll have, as of now we are selling what, closer to 1 million, right?
Last year we sold around 1.4 million, 14 lakh tons. This year we are planning 1.6. After this goes to the full capacity, because in our smelter we require only 0.9, 0.95 million tons. The rest has to be sold in the open market.
Next year we'll get extra 1 million tons. Meaning full.
Yes, sir.
Okay.
That has to be sold.
Okay, sir. Thank you. That's all from my side. Sir, one more.
Yes.
Ma'am, please press star one. Parvani ma'am. Meanwhile, we will take Mr. Rajesh Majumdar from 360 ONE Capital. Yeah, Parvani ma'am is back. Please go ahead.
What was the cost of this 1 million ton new refinery?
Around INR 5,600 crores.
Okay. Fine, sir. Thank you. That's all from us. In fact, this is all one more thing, sir. This is all through internal accrual, right?
Yeah, it was internal accrual. No interest will be loaded. Depreciation only will be there.
Okay. Thank you. Thank you so much.
Thank you.
Thank you. The next question is from Mr. Rajesh Majumdar. Please go ahead.
Yes, sir. Good morning and thank you for the opportunity. I had a quick question on the bauxite alumina part. First of all, on the existing bauxite mines at Panchpatmali, what is the balance, like of the Panchpatmali mines? What is the reserve there? Pottangi mines, what are you producing right now and what is the capacity going to go up to next year?
Basically, at our Panchpatmali bauxite mine, we are having a reserve of around 110 million ton. In addition to that, we have acquired new mine, which is also having around 110, 120 million ton. If we take the present rate of this thing, 85 lakh ton, around 8 million ton per year if we take, we can say that the balance life of our Panchpatmali bauxite mine will be approximately 15-20 years.
Okay. I understand that the Pottangi mine, the bauxite quality is better due to which the cost of production for the new alumina expansion is going to be lower. Is that correct?
Please repeat.
I'm saying that the quality of bauxite, which is going to be mined from the Pottangi mine, is going to be incrementally positive for the cost of alumina production going forward. Is that correct?
The quality of bauxite at Pottangi mine, we will come to know after detailed exploration and all, after development of mine. At this point of time, we cannot be 100% sure that we will be getting that advantage.
Okay. How are you assuming that the caustic soda requirement for the new expansion will be lower based on the plant specification, not on the bauxite, is it? The caustic soda.
Basically, for this year, we will be feeding bauxite from our existing mine to the new fifth stream. Once the production of Pottangi bauxite mine starts, then only we will be using Pottangi mine bauxite. This bauxite both will be mixed and proportionately will be used in our fifth stream as well as in old stream.
The cost of production is likely to fall further with the Pottangi mines being operational fully. Is that correct?
I think more or less it will be same. Yes, because you see, when the new mines are operated, the quality is better. When the mines become older, we go deeper, the quality is deteriorating. This will be a new mine, so the quality will be getting better. In our new refinery, which is coming out with the pressure digestion, with the new technology, there the caustic soda consumption advantage will be getting due to the new technology in the refineries.
Right. Thank you. Sir, I wanted to ask on the alumina realization one question, because we tracked something on the LME, which is a different number from the one you said on the $370, because LME average for last quarter is $320, $325. You've got $370. Could you tell us which countries the broad breakup of the exports are and why is there a difference between the LME and your realization?
As far as you're talking about alumina, no?
Alumina, yes.
alumina is not directly linked with the LME. It totally depends on the supply, demand supply of the alumina. Earlier we used to get from, if you compare to LME, it was, we are getting around 14%-15%. It has come down to 10%-11%. Most of our alumina are going to the Middle East. As of now also, around 60%-70% of the alumina is going to Middle East by some route or other. A few of the aluminas are also going to maybe Europe. Some China, some shipments are going. Actually what is happening is the bauxite prices have gone up also slightly. New Guinea due to rains and all that. In Rusal, Russia, and also China, two of the major refineries, they have curtailed the production of alumina because of the red mud issues there.
Some supply, temporary supply restrictions are there, which has caused to the increase in alumina spot prices to the level of $370-$380, which we are seeing with easing out of this war situation and supply requirements in the requirement of alumina in the Middle East. It will continue to the same level.
Right. On the long term, the alumina prices will veer towards 14, 15% of value. Is that the right assumption as the third string comes back in aluminium?
Not 14, 15, maybe 12, 11, 12% all, because LME on the higher side, LME is around $3,200-$3,300. Alumina, if you see percentage wise, it will not go more than 11%-12%.
Right. Sir, my last question was on the net debt. Did you mention that the net debt is INR 10,000 crores now?
Net debt?
Net cash. Net cash, sir. Net cash.
That is the cash reserves. That is the cash reserves. We are zero debt company.
No, what is the net cash as on the balance sheet as of the first quarter? Cash minus net debt.
That is around INR 10,500.
That means that through the year, even after your dividend payments, you'll end up with a INR 15,000 crore kind of cash. Is that a correct number?
If you see the balance cash flow and the CapEx, actually if you see the balance cash flow for FY 2027, yes, our Director of Finance will explain you every year how much we will be adding in the cash.
No, we have a balance of INR 10,500 now. Every year, seeing our profitability and the PAT, we are adding INR 3,500+ . We are expecting earning the PAT of INR 6,000+ . This year also we are projecting to earn INR 6,000+ and next year onwards also. After paying our dividend and our normal CapEx expenditure around INR 1,500 crore, and the non-cash item will be added to that PAT, we'll be earning INR 3,500+ every year. When our CapEx funding will be there, we will have a sufficient PAT reserve with hand, so we can easily finance our requirement through our internal accrual flow. Okay? And that CapEx from the smelter will be approximately what, INR 4,000-INR 5,000 crore per annum?
Yes, sir.
We have already explained that for a power plant, we have gone for a JV. Requirement of fund will be lesser there because that will be funded through debt-to-equity ratio, debt-to-30/ 70, so 70/30. The balance in our smelter part will be funding through our internal accruals only. We need not go to the markets for borrowing for our smelter expansion. Seeing our cash reserve and our earning future earning potential.
Sir, one last question, if I could sneak in. The capacity of the aluminum right now, on the 950 pots we are operating, is 460,000 t. Is there a possibility of any downfield kind of growth there, or is it limited to 460,000 only? Like in the case of alumina, you are from 2.1, you are limiting 2.3.
Sir, we are having capacity of 460,000 t. Last year we have produced around 4.72. This year also we are expecting we will be producing around 476,000 t, 477,000 t.
Realistically we are operating at, as on date, we are operating around 958, 959 pots.
Okay. Realistically you can go to 4.75 kind of number, totally, in aluminum?
Yes, sir. 4.75 we are.
Yes, we will. Thank you, sir. Thank you so much for your bidding.
Thank you, sir. As there are no further questions from the participants, I now hand the conference over to Mr. Bharat Kumar Sahu for closing comments. Please go ahead, sir.
Thank you, Mr. Challenger. On behalf of NALCO, all the esteemed participants who took out their valuable time and participated in this morning call of NALCO. This shows your keen interest in the business activities of NALCO and also in the future we expect and similar kind of cooperation from your side. Thank you, Koresh team, for facilitating this post-earning call for this Q1 results of NALCO. I also thanks Systematix Group for continuously hosting this post-earning call of NALCO on quarterly basis, and we solicit similar kind of cooperation in future also. Thanks. Thank you all.
Thank you. Thank you.
Thank you. On behalf of NALCO Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.