National Aluminium Company Limited (NATIONALUM) Earnings Call Transcript
November 7, 2025
Earnings Call Speaker Segments
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. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Shweta Dikshit from Systematix Group. Thank you, and over to you, ma'am.
Thank you, operator. Good evening, everyone. On behalf of Systematix, we welcome you to the 2Q FY '26 and First Half FY '26 Earnings Conference of NALCO Limited. I would like to thank the management for giving us this opportunity to host the call. I now hand over to Mr. Bharat Sahu, company secretary, NALCO, to discuss the company's financial and operational performance for the second quarter and first half FY '26. Over to you, sir.
Good evening, [Foreign Language] and greetings from National Aluminium Company Limited in Navratna CPSE under the Ministry of Mines. I take pleasure in introducing NALCO team in today's post earnings call. NALCO management is presented by Shri Brijendra Pratap Singh, Chairman Managing Director; Mr. Tapas Kumar Pattanayak, Director HR; and Shri Abhay Kumar Behuria, Director of Finance. Myself, Bharat Kumar Sahu, Compensatory of NALCO. Today NALCO published an impressive Q2 and H1 results after the board took it on record in the meeting held in [indiscernible]. Present this regard is already uploaded in the website in both the stock exchange site as well. And 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, MDO NALCO and with me Director HR, Dr. Tapas Pattanayak, and the Director Finance, Abhay Behuria is there. We are very glad to inform that with the dedicated efforts of all the employees of the NALCO, we've been able to report best-ever Q2 and H1 performance, both in the terms of production and financial. Our Q2 performance and H1 performance has been excellent. If you see Q2 performance like-to-like Q2 '24, '25, our excavation bauxite exploration increased by around 13%, alumina production increased by around 15% Q2, Q2 compared to last year. And cost of metal production also increased by around 3.48%. Our overall revenues from operations 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 '24, '25 and H1 performance, '25, '26, there is a substantial jump in that like excavation has increased by around 6.25% bauxite excavation. [indiscernible] alumina production has increased by 31.33%. Cast metal production has increased by 3%. Revenues from operation has increased by 18%. Our profit -- PBT, profit before tax, has increased by 47% and PAT by around 50.2%. Alumina sales has also increased by around 81%. The major contributor if we see H1 compare H1 of '24, '25 and '25, '26 has been the increase in volumes. Our alumina volume has increased substantially, and our efficiencies, efficiencies has also increased. The increase in volume has given us around INR 700 crores and efficiency has given us around INR 300 crores if we see compared to last year's June. So 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 30% of the expansion is complete, and we are planning next year, June '26 to commission the refinery [indiscernible] minute to refinery wherein our existing refining capacity which is around 2.1 million tonnes, will become around 3.1 million tonnes. And on 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 5 lakh tonne smelter in next 3 to 4, 4 to 5 years by 2030. So we are having a robust, very good result both in terms of physical and financials. Any queries from any questions from the participants who are there in the conference call, we would like to take on the questions.
[Operator Instructions] Our first question comes from the line of Amit Lahoti from Emkay.
Congratulations on a good set of numbers. So my first question is on alumina, where we are doing the expansion project. Are we on track to achieve commissioning in early FY '27 as per the previously guided plan?
We are not getting you properly. Can you please speak louder?
Our Alumina and [indiscernible].
Of course, our [indiscernible] planned -- expansion plan. Earlier, it was scheduled to be completed in September '25, but it has got slightly delayed. And now we have -- our revised target is June '26. Already, we have revised it earlier. Now we are on track. And whatever time lines of June '26 we are taking -- we have taken, the commission it is June '26.
Okay. And 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?
Yes.
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. Rest of the production is to be sold in domestic and export market. Of course, export is the main market we are doing the selling. But our inventory, which we have a carrying capacity of around 75 lakh tonnes in our back silos and around 36,000 -- 35,000 tonnes in -- again 36,000 tonnes in [indiscernible]. So we cannot store a lot of material there. So we have to -- whatever we are producing, we have to sell it. So on an average, we are planning that 4 to 5 shipments per month will be exporting to outside and our domestic sales will be around in between 10,000 to 12,000 tonnes in the remaining months.
Okay. And lastly, do we have any hedging volumes in aluminum, any hedge in volume and prices?
No. We have not gone to that area because most of the product of aluminum is our domestic sales. So we have not try to go for the hedging because our price mechanic very transparent and based on our alum. So that we don't feel in record for NALCO now. So we have not gone into that to now hedding.
Our next question comes from the line of Aditya Welekar from Axis Securities.
My question is with respect to our team of [indiscernible] stream of alumina refinery. So how much are we targeting for FY '27. In earlier call, we had said a number of 5 to 6 lakh tonnes. So is that number impact? And can we expect a full ramp-up in FY '28?
Yes, yes. That will be the full ramp up in there and whatever we have planned of 5 lakh tonnes, that will come because in June when we commission, we'll be having around 8 to 9 months in hand. So 5 lakh tonnes is the plan which we are having now also. And FY '28 will be the full ramp-up.
Understood. And coming on the smelter expansion. So in the earlier call, you have said that we will file for DPR in next 2 to 3 months. So at what stage are we -- I mean, is the DPR ready now or it is pending?
No, no. In the earlier call, whatever I have told that was not 2 to 3 months DPR progression. That was the appointment of consultants. Our plan as of now is that both for CPP and smelter, our DPR, we have appointed the consultant for CPP and DPR -- consultant for smelter is under process. This month it will be appointed. They will be taking 6 months to make the DPR. Our plan is 26th June, maybe June, July, the DPR will be ready, and we'll take it to the board. And after the board approval, we'll start the tendering process and complete the all ordering by 27 March. And after that, the actual round work will start. And from there, 3 to 2.5 years will be the time line for commissioning of the plant in 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 '27 onwards, right? Is that understanding correct?
Yes. Start from '27 onwards, yes. In financial year '27, '28, it will come.
And what will be our guidance for... go ahead, sorry.
Total CapEx, total CapEx involvement?
Yes.
So CapEx involvement in [indiscernible], the CapEx required will be around in between INR 17,000 crores to INR 20,000 crores. And for power plant, it will be around INR 10,000 kr to INR 11,000 crores. So combined, if you see, it will come to around INR 30,000 crores.
Right. So from the first -- from FY '27 on a ballpark basis, what kind of CapEx means we can expect, we can build in? And what will be guidance of CapEx for '26 -- FY '26.
Yes, very good question. If you see the balance sheet and network of the company and the class union 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. And if you go on having profit in this rate, then we'll have a balance of -- we are about 20,000 plus, but we don't think our record is 30,000, okay. If there is 2 model, we are now interpreting to go for this CapEx. One is smelter EPC and [indiscernible]. If you got the project in EPC more, we may need at end of the year, '27, '28 or 2029, the requirement of fund will be around INR INR 5,000 crores to 6,000 crores borrowing from because our cash balance will take care of the intermediate payment. If you go to the second model, EPC on smelter and JV 50% [indiscernible] power, then we may not require any house and full support to finance our projects. This is as of the projection, which we have made.
Our next question is from the line of Vikash Singh from ICICI Securities.
Thank you, sir, for the opportunity and congratulations on Sir, just coming back to our alumina sales. So we probably have a draw down the inventory now. So how should we look at the second half total alumina sales via annual guidance.
H2 also our -- whatever our alumina sales, like H1, we have done the sales of around 7 lakh tonnes. So H2 also, our overall yearly plan was around 12 lakh tonnes to 12.5 lakh tonnes. H2 sales will be around maybe somewhere around 6 lkah tonnes to 6.5 lakh tonnes of [indiscernible] will be there.
And how should we look at the average prices, spot prices versus the average you have seen in the [indiscernible] for both aluminum and alumina?
Average prices that we see in Q2, the average price, which we got was around $380, but as of now -- as of date, the spot prices are around $320. So H2, we are expecting somewhere slightly favorable. It will be somewhere in between 320 to 340 for alumina. And if we metal, our if you see metal [indiscernible] in the Q2 was around 2597, around 2,600. And in the remaining as of now, the LME is around 2,850. So 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 crores to 2,900. Sir, any progress we have made in the KABIL joint venture, which we [indiscernible] in the Argentina or any other rare metal because there's a lot of buzz that we are looking to some of the rare earth meters. So it could give us some about those segments. As far as KABIL is concerned, KABIL, we have got 5 mines in Argentina, and this all 5 mines non-invasive exploration is complete. We have done the noninvasive exposition. After that, now we have to go for invasive exploration. The results of non-investigational. On investments, we do it from the surface, from the top. Now we have to do the drilling and see the actual debt where the lithium is available. So for that, the appointment of consultant has been done. This consultant will -- is going to appoint an exploration agent, which will be done in the next 1 or 2 months. This exploration agent will start the exploration. And next 6 months, we'll be knowing the results at what at what depth the lithium is present. After that, it is a responsibility of a curation agent to set up a pilot plant. They will set a pilot plant there. And the results of the pilot plant regarding the grade of lithium and the commercial mining, that will come in next maybe 8 to 9 months. Next 1, 1.5 years -- next 1.5 years, we'll be able to know whether the commercial mining there is possible or not. But since the -- there is already operational mines there, the [indiscernible] mine is already operating in the nearby area. We are quite hopeful that the lithium will be there and the commercial mining will be there. But after this exploration, next 1.5 years will come to know what level of commercial mining we have to do.
Got it. And sir, just one last question. This [indiscernible] theme of alumina, while you will be completing next year. What -- by that time, what would be the total CapEx you would have invested in this project basically. So -- and 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 1000 crores, INR 5,000 crore, INR 100 crores, INR 200 crores or INR 300 crores aluminum project, somewhere around that will come the total for alumina. But as of now, we are seeing the alumina prices are on the lower side, it depends on the global scenario of the ability of the bauxite or ability of the alumina, it can go high also. It is very difficult to calculate the IRR and all that, but 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 10,000 plus of margin to that of -- in our export market or in the domestic market. So we will be having a positive margin in alumina. As far as Pottangi mine is concerned, this month is still we are going to order the MDO tender and our target is to 1 by June, we have to start the mine.
Our next question is from the line of Kirtan Mehta from [ Baroda BNP Pariba Mutual Fund ].
The first question was about our refinery expansion. We have mentioned that we have achieved 80% physical completion. Could you highlight what are the key packages spending within 20% completion and what are the time lines? And the second related question was what is the actual capital spend that we have done so far? And how is our plan for sort of the rest of FY '27 as well as FY '27 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, operation. These are the 45 packages, which are very critical. And these 4 packages -- and the rest later is on the electrification that is the laying of cable and final instrumentation and automation drop, which is the last thing to be done. So all these time lines, what we are taking is almost the structural work, structural action, equipment direction of these critical packages will be over by March, April. And from that 3 months for overall electrical layout of the cables and connections and trial and testing, so that will take maybe 3 months. So June, we are targeting to be will start the commissioning process. As far as our CapEx expenditure is concerned, till date, we have been around INR 4,500 crores of CapEx expenditure in this project.
Your plan for the H2 FY '26 as well as FY '27, if you can break up your CapEx spend plan as well?
What do you exactly mean?
No, I was asking ...
Capital expense deal.
For the balance in FY '26, how much CapEx you plan to spend on the refinery? And what would be your spend on the refinery for FY '27?
By end of the '25, '26, our CapEx ex -- so you have already accumulated expenses INR 2,500 crores in the remaining 4 months, we are expecting to be spend around INR 600 crores to INR 700 crores on [indiscernible] and the balance since the completion date [indiscernible] which I was telling my June, we will be completing this project and the project poster, the balance 10% to 5% [indiscernible] will be releasing that year '26, '27. By '26, '27 the project Payment and expenditure will be closed totally.
Thank you for this detail. Also, you mentioned about that the will earn minimum margin of around INR 10,000 per tonne 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 refineries?
Existing will be slightly better because the depreciation will be not there. We don't -- we will not be having interest. But in this refinery the cost will be on the low side because the manpower requirement will be less that, you will be having a better efficiency, the caustic [indiscernible] closer consumption will be less, the volume with 1 screen. Now in the existing with 4 screens, we are making 2.1 million tonnes. But in the new 1 with just 1 stream, we'll be making 1 million tonne. So we will be getting the benefit of increased volumes, increased efficiencies. So the cost -- whatever cost we are incurring now only slight increase, maybe INR 1,000 or INR 2,000 tonnes -- per tonne increase in the cost will be there. So presently, we are getting a margin clear margin of around 120, 1,000, 3,000 tonnes. Maybe that will come down to maybe 11,000 tonnes in the expansion to fund alumina.
So when we say 11,000, it would be combined upgrading in EBIT margin that we are talking about. Tariff for the the combined operation -- total refinery [indiscernible].
Alumina, we are talking about aluminum alumina costs, whatever our total cost of alumina and whatever [indiscernible] we'll get, the difference will be there, will be around 10,000 to 11,000.
Sure, sir. And one last question from my-- one last question from our side. Could you remind us basically the sensitivity of our profit to $100 change in alumina price and $10 change in mean the alumina price, aluminium $100 and $10 [indiscernible] Alumina price.
If it's still [indiscernible] not realizing we have achieved in the H1, and that is a fraction of alumina price almost $50 [indiscernible] the last -- first of the year and at [indiscernible] of us. So we are able to sustain that, no issue. But $100 process will be there from the present level, that may update. So how but our cost [indiscernible] is much more between our cost of production and the realization. So it will not be affected much. And what will happen now, if you have suffer a centenarian segment, then our metal price will be definitely higher. It will take care of the [indiscernible], which we are expecting in Alumina. So as a whole company as a whole, will not be affected much.
Our next question comes from the line of Shweta Dikshit from Systematix Group.
Sir, I have 1 question regarding the commissioning time lines when we are targeting commissioning by June. When do we expect the commercial production to begin now, what is the likely to be the ramp-up schedule. So wanted to understand how we are targeting 5 lakh tonnes of for alumina sales in -- incremental alumina sales in FY '27.
Commissioning -- when we'll start the commissioning in June, it will take amount around 2 to 3 months to ramp up the production to the maybe 70% to -- 60%, 70% level. That's why we are targeting around 50% of the production will be JV in the next year of 10 lakhs, 5 lakhs, we'll be doing. We [indiscernible] start in the June. Maybe somewhere in August, September will be stable too, because it is a chemical plant, it doesn't take a lot of time. 3 to 4 months, we can reach to maybe 70%, 80% of the rated capacity if everything is okay. That is our target. So next, that's why we are planning will be having full 6 months in hand after September. That's why maybe we are planning to that INR 5 lakh tonnes of production will come from the refinery -- new refineries.
So again, we are looking at 0.5 million tonnes of capacity and expecting it to utilize that 0.5 million tonnes at almost 100%. Is that -- this might be theoretical but if possible, but does it seem to be practically possible that we are seen for the red -- the meaning 6 months we achieved almost close to 100%.
The remaining 6 months, maybe we'll be ending up with somewhere around 70%, 80%, depends on how the commission goes, that depends as we have planned to will be doing around 5 lakh. Maybe -- and as far as sales is concerned, we are targeting domestic markets to increase our sales in the domestic market and we are targeting some long-term buyers, we are splitting on UI to have long-term customers from maybe [indiscernible] somewhere to have a long-term ties with us so that whatever increase in volumes of alumina will be there, that will get absorbed there.
Our next question comes from the line of [indiscernible] from HSBC. You may proceed with your question. As we're 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.
So first question was on the [indiscernible] between I -- am I audible?
Sir, you are audible. You may proceed.
Sir, the first question was on the divergence between aluminum and alumina prices so normally, Alumina is probably about 14%, 15% of the spot LME aluminum prices was long term. So recently, you've seen that alumina has been pretty weak whether aluminum is continue to go up. So any particular reason for the weaker Alumina prices right now?
Weaker alumina is basically due to the availability of the alumina, Indonesia -- around 2 or 3 refineries have started in Indonesia and some smelting capacities have also gone down in a few other areas. In China also, they have restricted their capacities in some other areas, some smelters also the capacity has gone down. So that's why the ability of the alumina is more in the market, which has cost to -- the price pressure on the Alumina.
Okay. And what about the alumina, the Chinese alumina refineries, their cost structure is pretty high. So because probably they're based on imported bauxite from Guinea or some other imported countries. So do you think that we've not really seen alumina trading below $300 for a sustained period of time. So is there a possibility that you can see some recovery in alumina prices over the medium term.
Oxalate normally in the Q3 and Q4, the production at all places are on the higher side in the recovery of the prices. Historically, we see in the Q3 and Q4, we have had better prices we are expecting it to go somewhere around 350 it should grow.
Sure, sir. Also on the cost part, are we seeing any inflation in cost for CP coke or CT pitch on the aluminum or caustic soda and the alumina side. So can there be an increase in the cost in the second half?
Second half, actually, first half [indiscernible] cost was on the higher side. The cost of CT coke and caustic soda has increased. So I think the level that will be maintained on that will be [indiscernible] it may go down also because if you see from last September price, the [indiscernible] coke last September was around INR 30,600 and this September end, it was around INR 42,000. So you're already on the higher side and even caustic soda has increased from 37,000 to 41,000. So we are not expecting to further increase. It may slightly go down or remain at the same level.
Okay, sir. So lastly, on the coal. So I think we would be ramping up a captive coal further. So 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've now seen that moderating in the monsoon quarter. So should this trend continue over the next -- over the rest of the year?
So if you see our power and fuel cost compared to H1, H1, it decreased by around INR 53 crores where the price of the coal, we got a favorable of around INR [ 36 ] crores was there and due to volume in power that INR [ 245 ] crores adverse was there but efficiency led to around INR 135 crores several. So it was almost same only INR 53 crores difference was there compared to H1 last year. So that power and fuel is concerned.
Yes, sir. So with captive coal increasing...
On the many ways also -- captive coal, of course, compared to last year, this year, we are increasing. Last year, it was around 2.6 million tonnes or 2.7 million tonnes. This year, we'll be doing around 4 million tonnes. So -- but the cost of whatever FSA coal we are procuring from NPL, whole India, that is also not very high. And with the removal of safe on the go, we are getting -- we'll be getting advantage on the [indiscernible] of coal from MCL, where we'll be getting advantage of around INR 157 crores in H2. So almost captive coal and MCL coal [indiscernible] will be almost same and maybe reduction of power costs will be further there in H2 with the removal of this
We have our next question from the line of Sumangal Nevatia from Kotak Securities.
I missed a few details. So please excuse if this is repeat. So my first question is on the refinery. How much have you spent till date or as of September.
Already, you have told around INR 4,500 crores expenditure has been made in our [indiscernible].
Okay. And sir, on the Pottangi mine?
Pottangi mines, already, we are in the process of appointing MVO. This month, we'll be appointing MVO and our target is due next year, we'll be starting the mines.
Okay. Okay. Sir, in case there is delay in the mine commissioning, what is the plan B for the initial few months in case there a delay?
Already, we have a separate project. The alternate sourcing of bauxite is there. We are making a parallel conveyor down in from our existing mines, [indiscernible] mines, which will be having a capacity of around 30 lakh tonnes per year. So that will get commissioned in April, May next year. So till the actual production from [indiscernible] startup, if it gets delayed by few months. The production from this alternate sourcing of bauxite will come. So there will not be shortage of bauxite for the expanded refinery.
Understood, sir. Sir, from the new refinery, what will be the cost -- how will be the cost 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 overall economic.
You see in the existing refinery, we have the capacity of 2.1 million tonnes, which is done from 4 streams. So where the manpower cost is very high -- and in the new refinery, only 1 stream, we'll be doing around 1 million tonnes. So the manpower requirement will be less. And it is with the latest technology, the high-pressure dilation technology, where the caustic soda consumption will be on the lower side and other efficiencies will also further increase. So what we are expecting that there will not be much increase in the prices. There will be -- we're getting advantage of manpower cost and efficiencies in technology and all that. Of course, the excess expenditure on depreciation cost will be there. Interest is not there because we are not taking any loan for that. Some depreciation costs will be added to our production costs. So maybe it will be almost same or maybe 1,000 or 2,000 more than the existing price.
Okay. Fine. Sir, on the coal mine, what is the production of captive coal in the first half? And how much have we bought from outside?
Our annual target is around 4 million tonnes. The first half, we have done almost around 2 million tonnes, somewhere around 2 million tonnes we have done the production. So we'll be hearing around 2 million tonnes, 1.96 million tonnes already we have done. So we are on the target of doing 4 million tonnes will be completing in the year-end.
And sir, our requirement is close to 6.5%, 7%, is that right? So redeeming 3 million tonne annually we have [indiscernible].
Requirement is around 7. Requirement is around 7.2 million tonnes. 7.2 million. So [indiscernible] we'll be getting from here and around 3 million tonnes from our FSS that is from [indiscernible].
Okay. And sir, and entirely, we are buying from them under FSA, you're not buying anything from the auction, right?
No, [indiscernible], we are not taking [indiscernible]. We're only taking through FSA.
Understood. And sir, the cost after the sales removal, you said for the captive versus the FSA, it is very similar delivered at the plant.
The delivery cost after [indiscernible] it is usually around [indiscernible], presently the coal is getting [indiscernible] and the coal being produced internally captivized there is a difference of INR 300 to INR 400. But after removal of the sales, INR 400 per tonne. So I think both the costs will be almost equal.
Understood. Understood. And just 1 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 program of CPP, but it is a good thing to notice that this year we have reduced purchase power to minimum. Last year, we have forced almost [ 3.81 lakh ] units from BidCo, which is a very costly one. But this year up to September, we have only used 77 [indiscernible] unit because we have produced more power from our internal CPP plan. So there is a substantial saving by not purchasing term from the BidCo, right? -- seeking the power enter our internationals.
So going forward, sir, will that go completely or remain at this level around [ 7,000 ]?
So last year, we have purchased our see INR 186 crores was INR '24, '25 and INR 186 crores. And this year, we are purchasers -- so around INR 136 crores of savings in H1 is there compared to last year as far as process power from the grid is concerned. Understood. And going forward, is it likely to completely become capture? Or this is a level which will continue -- we have got a capacity of around 1,200 megawatts. We normally have 10 units running, 10 units installed of 120 megawatts. So we do annual overhauling of 1 unit and we give 1 unit standby. Sometimes some -- due to some issues, some breakdowns. Sometimes we have to shut down the running boilers or maybe turbine, some issues are there, then only we do take the power from grid. Otherwise, certain captive power is there.
Understood. Got it. And sir, when is the mine lease renewal do for our existing bauxite mine.
Existing bauxite mine renewal, I think this is up to 29. I ought find out and check it.
29?
Outlook for 32.
We have North and Central block and South Block. So central block is up to 29 and south block is also 30, 45, I think, but I think we want to check up the data, check up the data that is there.
So after the expiry and renewal, what is the increase in royalty costs, which will happen?
If you see the mineral conversion rule, where the condition that the renewal will be given for 120 years to the government company. There's a concession in an layer of [indiscernible] rule which has been 2015 and there to amend, there's a provision there a government company, they'll be given another 20-year lease. They may start some SR that is not known to us till now. But there is a certainty that we'll be getting their mines. But the premium they will be charging that is not known to now they depend upon the government policy.
Okay. Okay. So for iron ore, it is 150% of existing royalty. So I just wanted to know [indiscernible].
Iron ore Is there, but bauxite is not -- [indiscernible] is not there.
I don't know after 2015, any renewal of the mines, 150% [indiscernible]. So the government is now thinking to say that. There is a news there. The government is trying to [indiscernible] that original at which the improving really nice.
Got it. And sir, any forecast on the employee cost, that's been quite stable. So what do we expect for this full year and next year to employee cost?
Okay. Employee costs our employee cost, if you see percentage-wise, it is around 18% and the retirements coming through of the senior level people will get retired, it's not going to increase. It will reduce, maybe it will come down to maybe 15% base because our [indiscernible], reduction will be there, so the volumes are also increasing. So to reduce by maybe 2%, 3%, not much because we are planning for some recruitment also.
Okay. So around INR 1,800 crores...
So sorry to interrupt you, I request you to please rejoin the queue for for further questions. Your next question comes from the line of Tushar Chaudhari from Prabhudas Lilladher Private Limited.
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 in the market due to excessive of rents, the overall demand, especially [indiscernible] rod and flat products, the demand was very less and we are having the stocks, which will try to clear off in this month. So stocks are there. That is the reason the demand was very less.
And has it improved now in this month? I mean, as monsoon has receded, but [indiscernible].
The [indiscernible] we were ending of the month, but projections are there, that it will improve.
Secondly, sir, what is our spot 2 contract issuing alumina sales -- on contract basis, we say how much [indiscernible] contract for alumina term in export market?
We have a term and spot contract. So we have done 2 term contracts, 1 term contract is for 3 months and 1 contract is for 6 months. So for next 3 months, normally, every month, we do around 4 shipments, 4 to 5 shipments. So next 3 months, 2 will be term and 2 or 3 will be spot. And after that, next 3 months -- 3 months also, we'll be having around 1 shipment of term, but we are going for 1 more term if we get better prices we are targeting at least 50% should be term and 50% of the stock.
Okay. But when prices are higher, you usually try for higher spot, right?
Actually, now the LME is on the higher side, and the forecast is that the LME will go high. So LME is high [indiscernible] to go for term because the term contract is linked to the LME. And now the spots are very low. Spots are on just we're getting $310 to $320. And like this month itself, this month itself, whatever our term contract is at from there, we'll be getting around $350. But our spot, we are getting around $320.
Okay. Okay. And sir, just in connection with the earlier question, what will be our approximate cost of landed coal from captive mines. I don't know what exactly, but it will be less than INR 2,500.
It is around [indiscernible] around INR 1,500 crores to INR 1,700 per ton. [ Lanes at our outline ].
Landed at our [indiscernible].
Our next question comes from the line of Rajesh Majumdar from [ 361 Capital ].
I had a few questions. Sir, the aluminum total revenue for the quarter is about INR 280 crores. If you divide that with aluminum 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 do you want to know?
I think the aluminum segment turnover is INR 2,880 crores, if you divide by the volume it is giving a price of INR 2,57,000, 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, in metal most of our metal is we are selling in the development market. This quarter, Q2 to 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, I understand that, sir. But if you divide the segment revenue by the volume, it is much more than that. It is coming close to $2,900 so does that mean the domestic premium is -- if you can give me the domestic realization in rupees per tonne for the quarter, then probably we can reconcile the number because the domestic premium seems to be very high, it is about 10%.
Per tonne, if we see for the quarter, I think it will come somewhere around today, it quarter 2, it is coming around [ 3,55,640 ] machines and H1 average, if you take H1 average, including the past quarter also, it is around 2,46,000.
That means that the domestic premium is close to 10% above the LME, the domestic semium, India premium. You're suggesting about 10% even higher.
Yes. Because on [indiscernible] custom duty.
And how much is the premium [indiscernible] will it be around the similar level or it will be lower? Because normal range is about 6% to 7%, the domestic India premium. Will it be at 10% or will it come down a little bit?
Our -- if you see our pricing mechanism, there are a few factors up there, which we adopt. That's the import custom duty [indiscernible] and some [indiscernible] transport on costs from to the location of the supplier that we also are there. Everything -- if you add it, it is around 10%, you're right.
So 10% -- so 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 we pursue is to doing that, seeing the market condition and all other factors
Okay. And sir, secondly, your aluminum volume for the full year will still be INR 4,50,000. That means second half we will do much more than the first half in terms of aluminium volumes.
The full year, we are planning for 470. 470 is the total plan for the ...
On the existing pot lines, how much total volume can we go up to maximum, I mean [indiscernible] capacity is INR 450 I think.
Rated capacity is INR 460. But this year, we have planned 470 and the present rate, whatever rate we are going we are going at the rate of INR 472 so 2,000 ahead of the -- whatever we have. Okay, we should be able to do at least minimum 470.
Okay. And sir, secondly, has your aluminum -- alumina cost of production fallen over the first quarter? Because if you look at the intersegment sales of alumina, the realization has fallen per tonne 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 front, which has given us a very good benefit by reduce [indiscernible] of caustic soda a major input material for our aluminum production. So definitely, our costs have come down compared to the first quarter.
And that is sustainable according to the cost of production.
Yes.
And sir, one last question from my side. [indiscernible] -- yes, sir what are you saying.
What I was telling to the caustic soda prices has also gone down. June 25, the price was around 44,000, the present caustic soda price is around 31,000.
And how much are we getting from the JV now, from the Gujarat alkali JV? And what is the cost of the caustic soda?
JV, whatever cost prices we realized from the market, the same price we took from JV also [indiscernible] forward size on the market. [indiscernible].
Okay. So you think that the cost savings that you've got in the production cost is more or less sustainable over the balance part of the year.
Yes, that is just number, whatever we -- caustic soda the specific consumption which we are getting now is around 96 kg per tonne of Alumina production. So that we'll be able to sustain.
Our next question is from the line of Manav Gogia from YES Securities Limited.
First question comes for the Metal segment. If I look at the aluminum EBIT for this particular quarter, that has gone up sharply on a quarter-on-quarter basis. Could you highlight the factors for the same?
We're talking about realization?
No, I'm talking about the segment results for Alumina?
Can you please repeat your question?
For the segment results for the Alumina segment. Hello?
Yes, please continue.
Yes. So sir, for the segment results for the aluminum segment, we have a number of INR 1189.37 crores and the top line of INR 2,880 crores that's roughly 41%.
You're right, you're right. If you compare the quarter 1 of aluminum segment price and quarter 2. The average price for the quarter 1 was around INR 2,37,000, whereas it is the quarter 255,0000. There is a jump of INR 18,000 in price per tonnes of aluminum. That is 1 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?
I think also slightly, we have increased on the volumes of olimus. Like first quarter volume was around 1.15. Second quarter, it was around 1.19, slight increase, down 3% [indiscernible] 4% increase, but more fees are 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 in the chemical business?
Alumina yearly sales we have planned of around 12.5 lakh tonnes of alumina sales. So first half, we have done around 7 lakh tons. For the rest of the year, we will be planning around 6, we'll be reaching around 13 sales. So around like 6, 6.5, we'll be selling Alumina. And as far as metal is concerned, metal sales will almost be came, which is there in the first half. 2.26, we have run in the first half. So if we are producing 4.7%, the rest of the things will be sold.
Our next question comes from the line of Sidak Mehrotra from Kotak Securities.
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, but what should that number be?
Employee cost, we are at present it is around 18% of the total cost. If you see the quarterly expenditure as well as employee benefit is concerned, it is around 440, it was around INR 440 crores this quarter. Earlier quarter was also around INR 445 crores. So annual, if you see it will go to around maybe somewhere around INR 1900 crores. And for next year it is around 18% of the total cost.
Got it, sir. And for next year, around say INR 1,650 type of crore, that reduction seems plausible or higher.
Next year?
Yes, next year. This year, you have seeing INR 1,700-odd crores.
Next year, we are going to ask some [indiscernible], but that cost will be offset by our volume because we are adding new first retirements or also [indiscernible] also there. 200 retirements. It will go slightly we go to around maybe 16% -- 10%, 15% will be the total cost.
Okay. So basically, you're saying that we start some sort of declining in there as well, right? Is that understanding correct, sir?
Yes. The declining trend, of course, will be there because whatever our employees are retiring and here on the highest slab of the basics -- basics and salary and whatever we are reducing there on the minimum scale. So the average salary will go down.
Understood. Sir, 1 small clarification. In an earlier earnings call, we had said that we had increased our alumina inventories. So in this quarter, I see that our alumina sales are much higher. So was there a liquidation of these alumina inventories also sort of led to much higher alumina sales this quarter? Or was there some other reason?
Alumina [indiscernible] you could think about alumina inventory.
Correct. Correct. So was there a liquidation of this inventory, which led to much higher alumina sales this quarter?
We have increased the production of -- the production of [indiscernible] alumina some H1 production compared to last year H1, it has increased by 31%. Last year, than we have done around INR 8.84 lakhs. And this year at H1, we have done around INR 11.61 lakh more. So the production has increased substantially that has led to the increase in the sales.
No, sir, I understood that point. Let's say, for example, when I'm talking about alumina sales, you're giving me a full year guidance. In the second half, you are saying that we will do 66.5 lakh tonnes. In the first half, we've done 7 lakh tons. So what I'm saying is that this number is higher because of 2Q, which means that -- was there some sort of inventory sales from alumina as well contributing to this.
As we said earlier, inventory was there once our stocks of alumina in the March 25 was at the minimum level. whatever sales you have done is on the production because you see we have done the alumina production of long 11.61 lakh tonnes and metal production at production was 2.34, so 2.34 means for that, we require alumina of around 5 -- 4.6% from 11.63% reduce 4.6%. So that's somewhere around 7%, it will come. So 7 lakh we have sold.
Thank you. Ladies and gentlemen, we will take that as a 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.
Yes. Thank you, operator. Thanks to Systematix group for taking keen interest in our financials of NALCO, and 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 for NALCO and participating in this conference call. Once again, thank you, and good way. 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.
Read the full transcript via the API
You're viewing the first half of this call. Get the complete National Aluminium Company Limited transcript - plus 252,000+ transcripts from 12,000+ companies, speaker segments and full-text search - through the EarningsAPI REST API or hosted MCP server.
Get an API key View API docs →For developers and AI pipelines
Programmatic access to National Aluminium Company Limited earnings transcripts and 252,000+ others is available through the
EarningsAPI REST API and the hosted MCP server.
Quarterly plans from $105 - full transcripts, speaker segments, full-text search,
and the /api/v1/transcripts/recent polling endpoint for ETL pipelines.