Nava Limited (513023) Earnings Call Transcript

Yes.

Okay. I also wanted to know as to -- regarding the equity incursion that we are planning to do, would that equity incursion happen in this current year -- in this fiscal year 2025 or would it be delayed to fiscal year 2026?

It would be spread over FY '26.

Okay. So, this rate regarding the new 300 megawatt plant, what would be the rate per unit that we have agreed and these are our old 300 megawatt plant?

The rate that has been agreed is $0.095. Currently, the current tariff goes at about $0.105.

Okay. Got it. Got it.

[Operator Instructions] The next question comes from the line of Gargi Singh from Value Investment.

Yes, sir. Just a bit of clarity on my previous question. So, for the entire 4 lakh trees, what is the total investment that will be required, sir? Is $45 million the amount for entire 4 lakh trees?

The $45 million investment is for the plantation as well as developing the pack house and the related infrastructure.

Sorry, sir. I could not understand. Is it for the entire 4 lakh trees?

It's for the entire project, the avocado project which includes the plantation of the trees, the development of a pack house that sorts the final fruit and also the supporting infrastructure. So, it's the entire project cost.

Okay. Okay. Understood, sir. So, yes. Second question is to Mr. Nikhil on the ferro alloys business. So, sir, I wanted to understand how is the profitability of the ferro alloys business in India now? So, in this quarter, we have reported around INR 7 crores of EBITDA loss in third quarter. But now, I believe the spreads are improving. So, with the current trend, how do you see the profitability in the coming quarter and what are the steps are we taking to reduce the volatility in terms of right customer mix or the right product mix?

As you rightly pointed out, things are looking on the up and up. Quarter 3 was particularly subdued for silico manganese wherein, the fixed cost recovery was becoming a huge challenge. Whereas, in quarter 4, we are finding that the export market in particular is faring much better than the domestic market wherein prices have increased by about 10% to 15% if you look at Q-on-Q. This definitely has given us some visibility because most of our stocks are booked until the end of the financial year. The other point is we also diversified into ferrosilicon which is a different product line. That has helped greatly to insulate us from the volatility in the silico manganese market. We find that there is good potential for exports to the U.S. particularly for ferrosilicon, which has been continuing for quite some time. In terms of your second question, how are we insulating ourselves? Well, fortunately, Nava has good working capital limits. As a result of that, we were able to purchase raw material, manganese ore and other raw material for ferrosilicon when prices may drop. So, we are essentially now covered until about September to November in terms of the raw material at a fixed price. So, this gives us a lot of visibility in terms of our costing and any further appreciation in the market should only improve the margins.

Sir, you spoke about the ferrosilicon but with regards to the silico manganese. So, I understand that the manganese ore prices are in a downward trend and if you have booked the raw material for this year at historical prices. So, would that be favorable for us considering that now the manganese ore prices are falling and the silico manganese prices are increasing?

I was talking about manganese ore only. The manganese ore prices hit rock bottom sometime in November, December. So, we picked up large quantities at that point which covered up until September. But now, if you look at from January onwards, in fact, the prices have been increasing. They have increased about 10% since the price in December. So, they have not been on a downward trend. They have been on an increasing trend.

Okay. So, second question is on the…

Gargi, I am sorry to interrupt. I think you are done with your 2 questions. The next question comes from the line of Nidhi Shah from ICICI Securities.

So, on the Zambia expansion that we are undertaking at the moment, I have a couple of questions on the commissioning and the timeline, so when did you expect this plant to start? And do we have any PPAs tied up, any bilateral agreements, anything like that? And have we come up with a tariff discovery?

So, yes. I mean, we have answered this question multiple times on this call. In terms of the commissioning of Phase 2, both units as per the schedule are to be commissioned by August 2026. And yes, we have a PPA that has already been signed with ZESCO at a rate of -- at a tariff of $0.095 for the expansion.

Okay. And the -- I also said on the PPA that the orders for the equipment have been placed. Have they been placed with the same person, the same Chinese player that we had done last time? Or are we going to some other player for equipment this time?

No. So, we have a turnkey ETC contract at the time with a different party than what it was last time. And all major equipment, some of them are similar, but some are not in terms of the manufacturer. But orders have been placed.

Lastly, on the ferrosilicon manganese, so we have seen that the sales are nearly 75% of the production. Are we expecting to keep our production at the same level and so forth as well? And you mentioned on the call that we're seeing strong export numbers for Q4. But would you like to comment on the FY '26 and how is that looking like?

So, I think in terms of the production volumes, we should actually see an uptake because we've had one of our shutdowns in Orissa in the month of December, where essentially for 15 days we were out of production. So, those numbers started to go up from Q4 onwards. In terms of the outlook, like I said, we are more or less booked until 31st March with very limited quantity left over. And I think based on the most recent bookings we are looking at a full recovery of cost as well as a margin.

And for FY '26, do you have any outlook for being able to provide some color on what we can expect in FY '26?

So, if you followed the ferro alloy market, it's been so extremely volatile that any assumption made today would not be holding true. But I think based on the fact that your raw material prices are going up, we hope that prices should either stabilize or improve going forward.

The next question comes from the line of AM Lodha from Sanmati Consultants.

I have 2 questions. One related to silico manganese. I understand that the prices in last 10-15 days have gone by 6,000, 7,000 per ton. And the phase rates have also been normalized, which was already very high. Now, every phase has been normalized. So, can we expect the turnaround in ferroalloys in coming quarters?

Yes, exactly, Mr. Lodha. So, prices are looking better than they were in Q3. And given that we have more or less a fixed cost structure for the next 6 months, any appreciation in finished products should help us in terms of profitability.

Sir, my second question is related to domestic power rates. Domestic power rates are normalized. How they are presently and what is the expectation of the management in the coming summer? Can we -- can the domestic power rates go up so as our domestic power business can do something for the company?

The power sector, particularly in the domestic operations are also having long-term visibility in the sense that for most of the capacity that we have, we have tied up until about September, October. We only have a minimal quantity that has been left over. And the primary idea behind doing that is to see, if there is a spurt in exchange prices, we would be in a position to take advantage of that. But having said that, the tariffs what we are witnessing this year around, even during the summer months are lower compared to last year. That is mainly on account of the election that took place last year.

The next question comes from the line of [ Aryan ] from CIM.

Yes, sir. I just wanted to know, could you segregate the segment revenue, the energy segment revenue, so can I have the domestic numbers and the numbers from Zambia?

So, we have published, standalone has been consolidated separately, Mr. Aryan. Standalone energy revenue is INR 204 crores and controlled energy revenue is [ INR 3,517 crores ].

Okay. Okay.

Do you have another question, Aryan?

No, no.

The next question comes from the line of Govind Gilada, an individual investor.

So, sorry, I could not hear properly your reply to Mr. Lodha regarding this arbitration award. So, at the cost of reputation, I am asking, how much we have received amount in this quarter? Now, as on today, how much is due now?

So, what we have received this quarter is USD 43 million. So what is pending or what is due is $160 million.

$160 million.

Yes.

This $43 million it means that regularly we are receiving $5 million. So $15 million, another some $28 million, you have received extra in regular what they were giving. My understanding is correct, sir?

No, as I mentioned during the last call, the payment plan is dynamic. We are in constant discussions with ZESCO. So it's not $5 million a month anymore. It's when they get lump sum payments, we take that. So that's exactly why we received $43 million during the last quarter. And we hope we will receive large payments in the months moving forward.

The next question comes from the line of Gargi Singh from Value Investment.

Yes. Sir, a bit of color if you can provide on the lithium and the magnetite mines where you were doing discovery. Sir, when do you expect contributions from this business?

So both lithium and magnetite, they are in their early stages of exploration. Surveys are being carried out, followed by drilling. So this process does take time. So we will not probably have an answer for the next few months. It will take about a year for us to have a concrete plan in terms of how we are going to move forward.

So while this process of discovery is ongoing, what is the cost that is incurred in this space on an annual basis and how much of that we see in the books.

Yes. so I think the cost that he has budgeted for the exploration activities is about $2 million.

The next question comes from the line of Viraj Mahadevia from MoneyGrow India.

This is regarding your thermal power plant business. Given that coal prices have come off meaningfully in the last 6, 8 months, are you expecting the spreads to widen and profitability to improve going forward as, both at Maamba and at the India plants?

Yes, so in terms of Maamba, it doesn't really make a big difference because at the end of the day, we have our captive mines. In terms of India, yes, we do definitely want to take advantage of the coal prices. I don't think they've come down per se, but they've not gone up at the rate that they were going up in the past few years. But we are taking advantage of the coal prices for our India plants. You probably know fuel cost is the biggest cost factor, so that definitely would help and benefit the plants.

Okay. My second question, Ashwin, just to get this a bit straight because you have a lot of growth initiatives underway in terms of the rough timelines. The Maamba Stage 2 thermal power plant is August '26. The Avocado is, let's call it, end of FY '26. Solar is early, but it's probably 2 to 3 years out. Lithium and magnetite are early, but probably 2 to 3 years out. Is there any other initiatives that's underway in terms of growth and expansion that I missed out on, and are the timelines correct?

Sugar is another one, which we are actively pursuing in Zambia, which is registered to the avocado plantage.

And what is the timeline of that?

So, both agri, it's not like, a commissioning date or so on. Even the avocado, we should start having our first commercial fruit actually end of this year. And sugar is pretty quick, so I think the cultivation will start probably this year as well if things go out planned. And the other project I think you have listed is both the manganese exploration that's currently being carried out in Ivory Coast and also the possible processing plan that we plan on setting up at Ivory Coast.

Okay. I thought my understanding, correct me if I'm wrong, I thought the manganese did not yield great results in Ivory Coast, or am I getting that wrong?

You know, you are partly right. We've been allocated 2 mines, actually, one of which, as the results were not very encouraging. But the second mine, which was recently allocated, is an area of about 360 square kilometers. And the exploration works there are ongoing. So we should know more properly in a year's time.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for the closing comments.

As we conclude, I would like to reiterate that Nava Limited remains focused on maintaining operational excellence and delivering value to our shareholders. We are optimistic about our future growth prospects and will continue to strengthen our position in our key business sectors. Thank you for all your time today and we look forward to your continued support. Thanks.

Thank you, sir. Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference. You may now disconnect your lines.