Ladies and gentlemen, good day, and welcome to Vedanta Aluminium Metal Limited's Q2 and half year FY 2026/2027 earnings conference call. 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 and then zero on your touchtone phone. Please note that this conference is being recorded. From the management side, we have Mr. Charanjit Singh, Group Head, Investor Relations, Mr. Rajesh Kumar, CEO, VAML, and Mr. Anup Agarwal, CFO, VAML. I now hand the conference over to Mr. Rajesh Kumar for his opening remarks. Over to you, sir.
Good evening, everyone, and thank you for joining Vedanta Aluminium Metal Limited Q2 FY 2027 earnings update. VAML delivered a quarter of record production, higher value-added volumes, and a strong financial performance. Aluminium production reached an all-time high of 649,000 tons, up 5% year-on-year and 3% quarter-on-quarter. Alumina production also reached a record of 895,000 tons, increasing 37% year-on-year and 8% quarter-on-quarter, with more than 1 million tons targeted in the next quarter. Value-added production reached an all-time high of 432,000 tons, up 31% year-on-year and 11% quarter-on-quarter, reinforcing our strategic shift towards 90% VAP mix ambition. PFA, Primary Foundry Alloy production increased 46%, and billet production increased 9%. Domestic sales achieved a quarterly record of 338,000 tons.
This stronger VAP production and domestic mix, supported by robust aluminum demand, translated into stronger realizations with NEP increasing to $453 per ton compared to $205 per ton year-on-year. Going forward, our focus is on structural cost improvement through operating scale and deeper backward integration. The next phase of volume growth will be driven by progressive ramp-up of Lanjigarh and increase in metal volume from BALCO Potline 3, which will come to full capacity by the end of this year. At BALCO Potline 3, currently 50% of the pots are in full production, and we will reach the full capacity run rate by end of this year. Alongside this, VAML continues to strengthen the captive resource position.
Consent to Operate for Sijimali was obtained in September, and BALCO has been declared as the preferred bidder for Karlapat Bauxite Block, driving captive bauxite security while Kuraloi and Ghogharpalli will increase the captive coal contribution. As we scale our operations, our focus remains on disciplined execution, cost competitiveness, and expanding portfolio of value-added products, enabling us to increase enduring value for all our stakeholders and meet the growing demand for aluminum. We are also conscious of our environment footprint, and we have increased our renewable energy mix from 321 MW in Q1 to 367 MW in H1. In the whole financial year, we want to have RE mix of more than 400 MW. We are also looking towards sustainable requirement or consumption of our fly ash into cement and many other areas, like road construction.
Overall, we have strengthened our governance in terms of the sustainability, and we have secured the second position in the DJSI ranking, and we look forward to further improve our performance. Now, I hand over to Anup to take you through the financial performance.
Thank you, Rajeshji, and good evening, everyone. We have sustained our performance momentum in quarter two, supported by record production, improved marketing mix, and sustained cost discipline, resulting in continued balance sheet strengthening. This was despite a sequential moderation in metal prices, demonstrating the strength of our integrated operating model and the impact of the structural improvements underway across the business. At a headline level, revenue for the quarter stood at INR 22,066 crore, an increase of 41% year-on-year and an increase of 5% quarter-on-quarter.
On the cost side, hot metal cost in quarter two stood at $1,722, up 1% quarter-on-quarter, with the structural benefit in alumina costs being offset by continuing inflationary pressures on carbon and fuel oil. Our marketing mix strengthened meaningfully during the quarter, with value-added sales increasing to 433 KT, up 30% year-on-year and up 13% sequentially. This shift supported stronger realization and reinforces the progress towards a premium product portfolio. EBITDA during the quarter was at INR 10,192 crore, up 83% year-on-year and lower 3% sequentially. Profit after tax stood at INR 6,187 crore, more than doubling YOY. Sequentially, profit after tax was almost flat, but for the exceptional charges of around INR 400 crore recognized in quarter two. We maintained a healthy cash and cash equivalent of INR 6,318 crore, providing a strong liquidity cushion and adequate financial flexibility.
Consequently, our net debt to EBITDA ratio improved from 0.9x in quarter one to 0.7x at the end of quarter two. Our credit profile continues to receive positive external validation. ICRA and CRISIL have reaffirmed our AA+ ratings with a stable outlook, while India Ratings has now upgraded Vedanta Aluminium to AA+ stable. These ratings reflect the strength of our earnings, improved leverage profile, and continued financial discipline. Our return on capital employed stood at 60%, underscoring our commitment to profitable growth and prudent capital allocation. We have also paid a dividend of INR 8 per share during the quarter, translating into a dividend yield of 2%, balancing shareholder returns with continued investment in our growth and integration projects. Turning to the EBITDA bridge.
Quarter two EBITDA stood at INR 10,192 crore, up 83% YOY, driven by a 26% contribution from operational factors with higher volumes, improved cost and marketing mix, and the balance coming from market and one-offs. Sequentially, as you can see, LME was down 10%, and the impact of which has been majorly offset by higher volumes and other operational factors. On the net debt, we have reduced the net debt by INR 3,090 during the quarter, from INR 29,532 crore at the end of quarter one to INR 26,442 crore at quarter end, after accounting for dividend payment of INR 3,190 crore. Importantly, the reduction in net debt was underpinned by cash flow of INR 6,043 crore during the quarter. This demonstrates the cash conversion strength of the business even after funding CapEx. During the quarter, we refinanced more than INR 7,000 crore of debt.
Our average term debt maturity now stands at 4.1 years, with the bulk of the maturities getting pushed to FY 2031 and beyond. The average interest rate cost is now around 8.5%. Turning to below EBITDA items. Depreciation cost is in line with the project capitalization and routine CapEx, while finance costs declined due to lower average borrowings. The profit after tax, as I mentioned before, exceptional items remained broadly in line with quarter one. Beyond the reported financials, digital and AI are becoming embedded value levers across operations and enabling functions. We have identified projects carrying an annualized benefit potential of $87 million. Looking at the value proposition slide, our strategic priorities remain intact. We are scaling towards 3 million tons of aluminium and 5 million tons of alumina capacity, supported by the ramp-up at BALCO and Lanjigarh.
At the same time, the commissioning of our bauxite mines and captive coal will progressively strengthen raw material security and lower our structural cost base. Post completion of the projects and the debottlenecking, we are targeting a hot metal cost of around $1,550 per ton and a value-added product mix of more than 90%. These levers, together with higher volumes and greater domestic market penetration, positions us to unlock exceptional value. The proposition is also supported by our scale and marketing position. At the targeted 3.9 million ton production capacity, VAML would rank among the largest global producers, while Indian market offers exposure to an estimated 40% demand growth between calendar years 2025 and calendar year 2030.
With the commissioning of the second zone at BALCO, we are now poised to operationalize the third and final zones in quarter three, quarter four, to reach the target run rate of 435 KTPA by March exit. On our alumina production, we are targeting a 10% incremental refinery output, each in quarter three and quarter four, thereby ending the year at a designed capacity. This would mean 85% captive alumina mix as we exit the year. Also with OMC expansion and Sijimali startup, we expect the captive bauxite to go up from 40% today to around 75% as we exit the year. We have some planned power plant shutdowns in quarter three. Post that, we expect the power cost to come down to the Q1 levels.
Additionally, we are also targeting operationalizing of our coal mines in H2, and we believe cumulatively these levers will give us a cost reduction of around $100 as we exit the year. Any relaxation in the input commodity prices being seen on account of the Middle East disruption would further augment this savings. At current LME, along with the planned value-added products, the expected cost levels, we expect to exit the year at an EBITDA run rate of $5 billion. Our cost guidance for the full year remains unchanged, with some escalation in Q3 on account of input inflation and planned power plant shutdowns. On the hedging front, for the balance year, we have hedged 22% of our volumes at an average price of $3,274 per ton. In closing, Vedanta Aluminium's performance in quarter two reflects the resilience of our integrated business model.
We remain confident in sustaining our performance through disciplined execution of our operational priorities and continuing to deliver value for our stakeholders. Thank you everyone, and now I hand over to Operator for Q&A.
Thank you very much. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and then one on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and then two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Your first question comes from the line of Indrajit Agarwal with CLSA. Please go ahead.
Hi. Thank you for the opportunity. I have a few questions. First, thank you for the detailed operational update. As you mentioned, you exit the year with a $5 billion EBITDA run rate, and assuming somewhere around INR 6,000 crore of CapEx, which is almost higher than what the current run rate is, how should we look at the capital allocation policy for the second half of this fiscal and getting into next fiscal? So in terms of increase in CapEx, dividend, how do you want to split that?
Thank you, Indrajit. See, there are two things. One, if you will look at the split between the standalone and the consolidated, you will find that we have higher profitability and the cash for even the standalone. Now at INR 50,000 crore or $5 billion, say INR 45,000 crore, one can expect that even after accounting for the cash of around INR 6,000, INR 7,000 crore, we will be left with 50% of the cash, you can assume around INR 25,000 odd crore. And even on a standalone basis, INR 17,000, INR 18,000 crore. Now, this INR 17,000, INR 18,000 crore can be used for three purposes. One, deleveraging. The second for the new expansion project, for which we are on the drawing board. And the third for the dividend. And on the dividend, you are aware that we have been guiding that based on the market cap, one can assume a 3%-5% broadly the dividend every year.
Indrajit, I hope I have answered your questions.
When can we expect the new projects to start incurring CapEx in terms of the further expansion?
We are in very advanced stage of the acquisition of land, both for the refinery as well as the smelter. Basically, once the land acquisition happens, the other part of the team is making on the drawing board the layout of the facility. That's also done. Once we are more or less closer to the acquisition of the land and the paperwork is done, then we can immediately, because we are ready to place orders. We already did the BALCO project, as you all know, in record time and with the least CapEx. We have a potential to execute things very rapidly and very quickly, and once the land part is done, we are ready with what we need to do in terms of the ordering and things like that, and we will be starting that once we are through with the approval process.
Lastly, on your coal and bauxite mine, at the current run rate, how confident are we of commissioning or getting some mineral out of Ghogharpalli and Sijimali by this fiscal year? Also we find that no update of Radhikapur is there in this PPT. Any changes over there?
Yeah. The order is that we have got several coal mines. First, we are already getting around 2.5 million tons from our Jamkhani coal mines, which is under operation. The next mine where we have put the shovel on the ground is Kuraloi. That is the coal mine which is around 30 kilometers from Jharsuguda. Then the third mine which we will start is Ghogharpalli, which we plan to do in the last quarter of this financial year. In addition to that, Radhikapur, we have put for the growth. That is the 3 million additional capacity of aluminium and the power project which will be associated with that of close to 5,000 MW. Radhikapur is for that. We have a very detailed way on how the incoming material and coal, everything, will be taken care of.
Now coming to bauxite, Sijimali, we have got the CTO, and we plan to produce 1 million ton this year from Sijimali and 5 million in the next financial year.
Thank you so much. I have more questions. I will come back. Thank you.
Th ank you.
Thank you.
The next question comes from the line of Sumangal Nevatia with Kotak Securities. Please go ahead.
Yeah, good evening. First, continuing on Sijimali, can you share what is the likely cost delivered at the refinery versus external bauxite, and what could be the cost saving once the mine ramps up?
Sijimali cost currently would be close to $60, because if we start the mine early, we get a 50% rebate on this, which will continue for the next 1.5 years. Subsequently, it will be at par with other domestic sources.
Sumangal, this is Anup Agarwal this side, and Sijimali basically will be replacing the imported bauxite, and one can assume, assuming $60, we will have a saving of 25 odd dollars per ton of the bauxite.
Understood. This year one, next year FY 2028 five, and then it ramps up to nine and 12. Is that the trajectory for next three, four years?
Sumangal, see, we have an EC of 9 million. One is what Rajesh Kumar has mentioned we are doing this year. Next year, five to six , and then, yes, nine. Nine, and then we can increase it to 40% more. That will be the trajectory going forward.
Got it. The second question is with respect to the recently won mine, Karlapat. I mean, the bid premium was quite high, so I just want to understand what is the rationale and economics there we are looking at versus Sijimali.
Sumangal, let me take that question. See, one, let me cover the rationale. You are aware that this was the last of the biggest, big bauxite blocks that came in Odisha. Given our expansion plans around the smelter and the refinery, it made a lot of sense for us to secure that. That was on the rationale. Coming to the cost. You just see what are the options with us. One, of course, our captive mine, Sijimali, that we have, and Karlapat, what we have acquired. That will broadly cater to the existing refinery. The other sources are only the Guinea-based bauxite, and given the geopolitical situation there and the high cost, it always made sense for us to secure the local bauxite. We have done some maths.
Even with whatever premium you are saying, we believe we will be able to generate alumina as and when we start the mine below $400. That is the whole maths around this.
Got it. One question I have on the expansion. The Chairman had said 3 million ton doubling in the medium term. I just want to understand what would be the cadence of this. Is it 1 million ton at a time? If you could share what configuration we are looking at and some color on capital intensity.
Basically, as we know, the capacity comes in phases. Right now also, as we speak, BALCO, 25%, then next 25% is done, and then in this quarter, we assume the 25% to come. So capacity will come in phases. But we have to do the whole project together. Cost-wise also, so we plan to replicate the latest potline, which we have put in BALCO of 525 kiloamperes. I think this is the largest kiloampere pot size, current-wise, outside China. We have had a very good experience over there. We ramped up at a rate of more than two pots, 2.1 pots per day, which is a world record as regards the ramp-up is concerned of such similar type of smelters. So we have a very strong team for operationalization and project implementation.
And for example, the estimated cost at which we have done the BALCO project of around $2,100 per ton, we plan to see how we can do it at the similar level. In this case, also, there will be some additional. But this, I am talking only the smelter. We will also have the cost for refinery and power, which will get added to it. But the strength of Vedanta is projects and execution and doing it at low cost and at speed. So we will leverage that and come out with a very solid low cost and high productivity and high output.
Got it. I will join the queue back. Thank you, and all the best.
Thank you.
Thank you. Our next question comes from the line of Sanjay Parekh with Sohum Asset Managers Private Limited. Please go ahead.
Yeah. Hello. Congratulations on commendable performance. My simple question was, because we are saying that we are going to have a yield of 4%-5%, and the stock is significantly undervalued. As you can see, most of the estimates, 4 x, 4.5 x EBITDA. Can you consider, without compromising on the CapEx for expansion, partially to pay dividend and partially to do buyback? This is just a suggestion to consider because it is a very right time to exhaust the equity which will be exhausted for life. That is just a suggestion.
Sanjay, just to respond to it, both the options that you spoke about is a matter of board, and of course the board looks at it. We are aware of the return that you mentioned, and we are also aware of the buyback option that you are talking about. They will be considered as and when by the board.
Thank you. Secondly, just to follow up, this 3 million ton expansion that Chairman has said, you did explain that it is at a drawing board level, and of course. Once you decide, my question was, first is, I just missed if the land acquisition is done or not. Secondly, of course, you need to look at all the resource planning and secure before you look for the expansion, which I appreciate. Just in case, if it is a 3 million ton expansion, fully integrated, what will be the capital cost of that? Once you decide, what could be the timeline?
As I already alluded to, we have applied for land to the government, and it is under very advanced stage of allotment, and we are awaiting for this allotment. See, we need around 1,450 acres at Kamakhyanagar and Dhimtanal for the smelter and similarly 400 acres at Kalyansinghpur for the refinery. All that we have public hearing and things like that have happened for the refinery and for that application we have given for the smelter. Basically, the approval part we are already doing, and in addition to that, we are also with the layout we have, we have put it on our drawing board, and we have configured for seven lines of the same configuration of 525 kiloamperes, which we just implemented at BALCO. A lot of it will be replication for us of what we have already done.
As I indicated, we already did the BALCO project at $2,100, and we would like to do it at similar or a better level.
Fantastic. What is your assessment of global demand supply in the next two years?
If I look at the global aluminum market, it is supposed to remain tight in 2026, and there is a deficit of 0.7 million tons. However, if I look at FY 2027, towards the later part, some facilities and capacities would be coming up in Middle East and Indonesia, by which some supply side will be added. So there would be some pressures towards the second part of FY 2027 on prices.
Okay, great. Congratulations again. Great set of numbers. Thank you.
Thank you.
Thank you. Your next question comes from the line of Vikash Singh with ICICI Securities. Please go ahead.
Hi, Sir. Good evening. Thank you for the opportunity, and congratulations on a very good set of numbers. My first question pertains to the cost inflation, which we might then see in the 3Q, given alumina power, you are saying there is a shutdown. How should we look at it, and also on the aluminium premiums which we can get in the next quarter. If you could throw some color on that.
Vikash, first covering the cost, and I think I covered it in the commentary that, H1 we did about $1,710 per ton hot metal cost. H2 broadly we should be around the same levels or slightly lower. Quarter three, because of the shutdowns and the carbon that I mentioned, one can expect a 4% or so cost increase compared to quarter two. On your second question on the NEP, and I think that is driven more by the lower MJP that we've seen this quarter. We believe that at this MJP compared to the 410 and compared to $425 odd NEP that we did, we should be about $50 lower in H2. The MJP would account for $70 odd, and the balance would be made up through increased VAP and the domestic sales.
Noted, Sir. My second question again pertains to our long-term CapEx plan. As I see that BALCO facility is what where the cash lies at this point of time, while the debt is with VEL. BALCO, we had only 51% stake. Just wanted to understand your thought process, whether the first million ton or an integrated plant, whatever you are going to set up, either is a 1 million ton into three or a 3 million ton one single plant, how the cash fungibility between these two entities would come in handy in terms of the CapEx?
Vikash, let me first answer on the earnings. I mentioned it at say about INR 45,000 crore or INR 50,000 crore EBITDA. The cash conversion is in excess of 50%, and I said that a sizable portion of the cash sits in standalone. In the standalone itself, and if I did some math and gave the number that somewhere around INR 18,000 crore -INR 20,000 crore of the cash at this EBITDA, you can generate in the standalone. With that, we believe that the CapEx will happen in phases over the years. One can easily fund the CapEx. Now, coming to the BALCO, and I thought I had answered it in the last analyst call. The cash at BALCO, as and when we finalize the project, all the options are on the table where. We will look at structuring that point of time.
Maybe some CapEx can come in the BALCO or things like that. On a standalone basis also, based on the earnings that we see, we believe we have sufficient cash to manage the forthcoming expansion as and when it is announced.
Noted, sir. Thank you and all the best for future.
Thank you.
Thank you. Your next question comes from the line of Shweta Dikshit with Systematix. Please go ahead.
Hi. Good evening, sir, and congratulations on a good set of numbers. Sir, my question pertains to Sijimali, and also help me understand or pardon my understanding, from the level where we are currently, like we got the CTO last quarter, and from there, what would be the next steps that help us achieve 1 million ton of production that we're targeting for the same year? Where are we on the various steps that would lead to actually extracting usable ore from the mine? Then how are we targeting a 1 million ton number within this year?
Just to mention that bauxite production is Mining is simpler than coal mining because the stripping is very less, and you have to mine from the surface. The concern is the managing the villages and the local stakeholders. We are currently on that part of the journey. We have done the approvals. The government approvals have come in place and everything is there. Now the part is engaging with the communities, doing the CSR, having a very positive impression about what Vedanta has done in that region. We already have, as we all know, what we have done in Lanjigarh is worth mentioning. The upliftment which has happened of the populace over there is something to see over there or to be there to understand. We want to create that positive impression that with our mining, there will be further development in the region.
But there are forces which you all are aware of from the media. We are treading the path very carefully.
Thank you. The line for the current participant has been dropped from the queue. We will move on to our next question. Our next question comes from the line of Ashish Kejriwal with Nuvama Institutional Equities. Please go ahead.
Yeah. Hi, good evening, everyone. Thanks for the opportunity. Sir, two questions. One, Ghogharpalli, where we are in terms of securing regulatory clearances, because you mentioned Q4 FY 2027, which means that you should have received all the approvals by now. So where we are in terms of that status? Secondly, in terms of OMC, the High Court order for which we have already gone for Supreme Court, what is the status on that? Are we planning to increase our sourcing of bauxite from OMC in second half and next year? Thank you.
Coming to Ghogharpalli, we are expecting to receive FC shortly and targeting all necessary approvals for starting the mine by end of Q4. We are likely to start production from the mine in end of this year or early next financial year, and we are targeting a volume of 5 million tons in the next year from Ghogharpalli. Coming to OMC, the matter has been partially heard in the Supreme Court, and subsequently, I think it will be further heard after Diwali vacations. So it is sub judice. Ashish, to your point on the increased volume. Yes, you are right. OMC is in the process of expansion of its mine from 3.6 million tons - 6 million tons, 80% of which, as per their LTL policy, is reserved for refineries in Odisha, and we will definitely target higher upliftment going forward.
Okay. So, sir, in case of OMC, have we started paying it at a higher price or still we are just making provisions for the same in our books?
I can tell you, Ashish, since the matter is sub judice, what we did was, since we are continuing to lift now, under protest, we are lifting at the price determined by them. But the matter is sub judice, as we said, and adequately covered in the notes to accounts, point number 12 in the notes to accounts.
Okay. Thank you so much, sir, and all the best.
Thank you. Your next question comes from the line of Jashandeep Chadha with Nomura. Please go ahead.
Yeah. Hi. Thank you for the opportunity, sir, and congratulations on a good set of numbers. My first question is largely on the cost saving, which will come from the coal mine and renewable power that you are putting up. I understand around $25 you are saying from the bauxite, which will account for close to $75-$80 on aluminium. If you can give a similar estimate, let us say over the next couple of years till FY 2029, how much per ton cost saving will come from both coal as well as renewable, and what percentage of your power will be renewable by FY 2028, FY 2029? Sir, my first question would be this.
You are aware that in our existing operation, around 500 MW of RE power is what we have contracted with Serentica. If you look at our existing, once all of that get commissioned, we will be about 10%-12% of the requirement. We want to increase this to maybe 25% as we go into, say, FY 2029, FY 2030, as you mentioned. On the cost saving, I will reiterate what we said. In the near term, we are looking at a hot metal cost of around $150, say about $150-$175 lower compared to the H1 levels. $100 odd dollar, $100, $125 odd dollars should come from alumina bauxite. Even with the partial ramp-up. Maybe $30, $35 as we ramp up Ghogharpalli, because that is the cheapest mine.
Because you will have to also see that whatever coal we have, even from the Coal India, they are at a reasonably auctioned price that we require. We will always look at it as a basket and depending on the need, we will source. Of course, as and when you have some Middle East disruption getting eased off, we should see another 50 odd dollars from there. I am saying on a drawing board, we have the initiatives worth 200 odd dollar. We expect this to have 100, 125 as we enter the year and the balance in maybe, say, another one or two quarters.
Sure. Thank you so much, sir. My next question is more of a bookkeeping question. With LME prices coming down, has there been any change in the hedging strategy? I believe 28% at $3,000 were hedged. For second half, have you made any changes? Last quarter, we had some hedging loss because LME was higher. Has there been any reversal this quarter or the prices are still higher than the hedged price?
Let me first talk about our approach on hedging. Our approach on hedging has always been, one, tactical, and the second, opportunistic, based on our informed view of the medium-term market and our objective to protect margins and cash flow. If we look at the hedges that we have currently outstanding, for the balance of FY 2027, we are hedged around 22% of our volume at an average LME of $3,274 per ton.
Understood, sir. Thank you. I will join back with you, sir.
Thank you. Our next question comes from the line of Kirtan Donga with Leo Capital. Please go ahead.
Thanks for the opportunity. Firstly, congratulations on a stellar set of numbers. Sir, my first question is if the bauxite price from Odisha Mining Corporation is increased as per the court order, how much does that impact our EBITDA per ton on an ongoing basis?
Can you repeat your question? You are asking how much will it impact on ongoing business? See, I will tell you.
Yes, sir.
Please understand, and I had covered it I believe earlier also. See, we had started doing additional provisioning the beginning of this year. Okay. Now, in the accounts, one will see that we are broadly providing it at, say, INR 3,000. While the matter is sub judice and the latest price, even if one were to take the OMC is INR 1,000, which means hardly $8, $10. So that is the hit part of it. Now you look at the savings that we will get. We get about 2.4 million ton of OMC bauxite, which can go up to 4.8 million or even higher. And the saving there will be around $15 per ton. So if you do the maths now, I am saying the maths will be in favor of the cost coming down rather than the cost going up.
Okay, sir. Thank you. That was really helpful. And my second question is, do we have any plans for greenfield or brownfield expansion of aluminium capacity in our India operations?
As already covered, we plan to have a greenfield expansion of 3 million tons of aluminum and a refinery of 6 million tons. That is for which we have applied for land at Kamakhyanagar. We are in discussion with the government to secure the land for Kamakhyanagar. Also, public hearing as we speak is happening for the refinery at Kalyansinghpur. These are under very advanced stages of approvals. In addition to that, we already have on the drawing board, done the layout. A dedicated team of engineers, around 10-15 engineers, is working already on the project, how to make the packages, and as soon as we are done with some clarity on the land, we will be placing orders.
Sure. That was really helpful. Can I get an estimated CapEx as well as the timing for the CapEx for this particular project?
Typically, if we look at the BALCO project, the CapEx cost was close to $2,100 per ton of capacity addition. We plan to be at similar level. This is only for the aluminum production smelter part, I am saying. We plan to be there or try to better given our experience which we have gained. In addition to that, there will be additional CapEx for the power and refinery, which we will figure out how to structure it. Our power business might do it. We will be exploring various options.
Sir, this $2,100 for aluminum refinery or including the back-end alumina?
No, this is for the BALCO project. I am telling the CapEx cost per ton of aluminium capacity. That is for 435,000 tons, we did at a CapEx cost of $2,100 per ton.
Okay. Thank you.
Thank you. Before we take the next question, a reminder to all the participants, you may press star and then one to ask a question. The next question comes from the line of Yash Kukreja with Systematix. Please go ahead.
Yeah. Hi, Sir. Opportunity. Demand and capacity.
Yash, your line has been unmuted. Please proceed with your question.
Hello, can you hear me now?
Yes, sir. Please go ahead.
Yeah. My question is on the global demand and supply scenario. I heard when you said that global capacities are coming in live. Could you elaborate more on it, like how it would impact us in FY 2027 and FY 2028, and what kind of scenarios are we building it for?
So, as I mentioned, the domestic demand remains very robust, and the growth which is happening in the country, in the power, in the transportation, in light weighting and many other areas, we see a very big upside. As regards already mentioned, as regards 2026 is concerned, there is a supply deficit. But going forward, it is difficult to forecast. But if the Gulf becomes normal and the full production starts happening as expected from Q1 end or Q2 beginning next year, calendar year, I am saying, then there would be some additional supply which would come from there, and some additional capacity of a million ton might come in Indonesia and other places, Middle East and other areas, which can lead to a little bit supply side extra of around 1 million - 1.4 million in the later half of FY 2027.
Got it. Sir, yeah, that was helpful. And sir, my second question is, could you help us with how much would be that interest liability in the OMC demand?
See, based on the debit note, and let me retrace that. See, it is contingent upon the case that we filed in Supreme Court, and Indrajit talked about it. They have raised the demand and around INR 1,100 crore-INR 1,200 crore is the interest portion that they have demanded, as per their calculation.
Yeah. Okay. Got it. Yes. Thank you so much, sir. That is all. Bye.
Thank you. The next question comes from the line of Aryan Kadam. Before we take the question for Mr. Aryan Kadam, we would like to remind participants, you may press star and then one to ask a question. The next question comes from Aryan Kadam with Plus91 Asset Management. Please go ahead.
Hi, sir. Congratulations on the numbers. Sir, you had guided a lower Q2 and a subdued Q2, but the volumes are much better compared to Q1 and last year YOY. Could you just elaborate on this?
We have had our capacities coming up. I do not remember us guiding that we will be lower in Q2.
We will- Yeah.
Can you elaborate? Please, can you elaborate? You are talking about the cost or the volume part of it?
The cost part. Sorry, not the cost, the production part. The cost EBITDA is obviously lower, but due to seasonality, you had guided for a-
No, we have not. I think there is some miscommunication. We are expecting an increase quarter-on-quarter, year-on-year as regards VAML is concerned on the volume, both in the aluminium and as well as in alumina. In this quarter, which is Q3, again, we will have an increase in volume, and in the Q4 also, and the next year also. We plan to have around 3% - 5% increase each and every quarter going forward. Just to clarify.
Okay. Sorry. Could you also just give me a brief on the cost reductions on coal and bauxite that will be coming up in the next two years? And what has been the savings for this year for alumina?
I thought I covered it. I will reiterate. See, on a drawing board, we look at a cost reduction of $200. $100 - $125, as I have mentioned, should come from the increase in captive alumina and the domestic bauxite. $30, $35 from the coal as we ramp up Ghogharpalli, another coal mine. The balance, because the Middle East escalations that have increased the carbon prices, at some point, as the prices soften, we believe we should get some relief from there also. So that completes the $200 part, and as I said also, $100 as we exit the year, and the $100 maybe one or two quarters thereafter. Another point is that while all of us have seen coal shortages and coal prices going up across the country, VAML is very solidly positioned as regards geography is concerned.
Both the assets which we have at Jharsuguda and BALCO plant sits in Korba, which is the hub of coal production. We are next to the coal mine. We are at the pit head. Similarly, Jharsuguda is also adjacent to the MCL. For us, sourcing coal has not been as much a problem as other players, given the distance that the mine is hardly 20 km, 25 km from where we operate, and that gives us a huge advantage in terms of the coal availability as well as the cost and the transportation cost savings. While the country as such has seen lot of turbulence in terms of coal, VAML per se has been insulated in terms of coal for our power operations.
That's what we want. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. This concludes our question and answer session. Thank you, members of the management. On behalf of Vedanta Aluminium Metal Limited, that concludes this conference. Thank you everyone for joining us, and you may now disconnect your lines. Thank you.