NAVA — earnings call
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Prepared remarks
Moderator · Conference Operator
Good evening, ladies and gentlemen.
I'm Pelsia, moderator for the conference call.
Welcome to Nava Limited Q2 and H1 FY25 Results Conference Call.
As a reminder, all participants 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 a Moderator by pressing * and then 0 on your touchtone telephone.
Please note that this conference is being recorded.
I would now like to hand over the floor to Mr. Mohit Kumar from ICICI Securities.
Thank you, and over to you, sir.
Mohit Kumar
Thank you, Pelsia.
On behalf of ICICI Securities, we welcome you all to Q2 FY25 earnings call of Nava Limited.
Today we have with us Mr. Ashwin Devineni, CEO; Mr. GRK Prasad, Executive Director; Mr. Nikhil Devineni, Executive Director; Mr. Sultan Baig, CFO and Mr. VSN Raju, Company Secretary.
Without much delay, I will now hand over the call to the management for opening remarks, which will be followed by Q&A.
Thank you and over to you sir.
Ashwin Devineni
Good evening, everyone, and thank you for joining us today.
I'm pleased to report that Nava Limited has delivered a strong quarter with significant growth in profitability.
Our consolidated profit after tax increased by about 72% YoY to Rs.
332 crores, highlighting our commitment to operational excellence and financial resilience.
Our Energy and Metals division has shown notable improvements supported by strategic planning and market adaptability.
Additionally, the Board's approval of a 2:1 stock split aims to improve liquidity and broaden shareholder access, underscoring our confidence in our growth strategy.
We're advancing on key projects, particularly in Zambia, with the 300-MW Phase 2 Energy project on track for completion at the end of 2026, and our agricultural expansion into sugar besides avocados.
These initiatives align with our strategy to diversify revenue streams and establish Nava as a leader in sustainable agriculture and green energy.
As we continue our journey, Nava remains focused on value creation, operational strength and sustainable growth.
Thank you for your ongoing support, and I look forward to discussing our results in further detail.
Thank you.
Moderator · Conference Operator
Thank you.
Next question comes from Abhinav from ICICI Securities.
Please go ahead.
Abhinav
Hi sir, good evening.
Thank you for the opportunity.
So, my question is for MEL Phase 2 project 300-megawatt plant.
What is the overall status?
What is the total project cost?
I understand the debt has been tied up.
So, what is the debt-to-equity ratio?
And has the equipment supply been secured?
Sultan A Baig
Yes, so the overall project cost envisaged is USD 400 million out of which USD 100 million is equity as indicated by our CEO and USD 300 million is a debt.
As of today, we tied up USD 260 million and depending upon the project progress and requirement, we will tie up the balance.
And the contractor has already been appointed and we issued the notice to proceed to the contractor in the month of August.
Currently, they are in the process of placing the orders for equipment supply from China.
Abhinav
Understood.
And one more thing in the balance sheet, I can see that there is cash of more than INR 1500 crores, including investments.
So, what are the plans for utilization of that cash?
Sultan A Baig
Yes, on the consolidation level, you'll see a significant cash balance, and it has to be split into the cash that we are keeping aside for growth capital and corporate actions, which is sitting in Nava Bharat Singapore and in-house treasury of Nava India.
So, Board will take a suitable decision at the right time for the corporate actions and the growth capital on the total cash.
Abhinav
Okay.
Thank you.
And I must say that the presentation is quite exhaustive, and its sort of gives us a lot of understanding.
Thank you for that.
Sultan A Baig
Thank you.
Moderator · Conference Operator
Thank you.
Next question comes from Gargi Agarwal from Value Investments.
Please go ahead.
Gargi Agarwal
Thank you for the opportunity and congratulations on the good set of results.
So, my question was out of the USD 100 million of equity funding, how much have we deployed till now?
Or if we have not, then by when do we plan to deploy?
Sultan A Baig
As on date, we have not deployed any amount.
The deployment will commence Nava Ltd 14.11.2024
Moderator · Conference Operator
Sorry to interrupt you, can you join back the queue, ma'am?
Gargi Agarwal
Yes.
Sure.
Moderator · Conference Operator
Thank you.
I request the participants to restrict with 2 questions in the initial round and join back the queue for more questions.
Next question comes from Pravin Desai, an Individual Investor.
Please go ahead.
Pravin Desai
Good Afternoon Sir.
Thank you for the invitation and congratulations for a good first half year result.
So, for liquidity purpose, you have approved stock split.
Our request is that since we have a very huge reserve, please give bonus.
Ashwin Devineni
Yes.
We're always looking at corporate actions that benefit the shareholders.
So, we'll take the necessary action when required.
Pravin Desai
Okay, sure.
Thank you.
But we are expecting some good thing from you.
The splitting is not beneficial to individual shareholders.
Only the number of shares will increase.
Liquidity may increase, but the value will not go up.
Ashwin Devineni
No, we always look at the shareholder’s perspective.
I mean, please don't forget that we just declared an interim dividend during Q2. So, we're always looking at actions that benefit the shareholders.
Pravin Desai
Okay.
Thank you, sir.
But in future, please think about this also.
Moderator · Conference Operator
Thank you.
Next question comes from Viraj Mahadevia from MoneyGrow.
Please go ahead.
Viraj Mahadevia
This is Viraj.
Congratulations on stable results.
Quick question regarding the dip in performance this quarter is because of the scheduled maintenance of India and Zambia plants.
Am I right?
Nava Ltd 14.11.2024
Moderator · Conference Operator
Thank you.
Next question comes from Nidhi Shah from ICICI Securities.
Please go ahead.
Nidhi Shah
So, I have couple of questions for Zambia.
Now that we have a power plant mining, avocado integrated sugar coming up in Zambia, what is the reason for expansion in Zambia?
Is it that the Zambia environment is good for now?
Secondly, what other opportunities can we pursue in Zambia that are related to our business?
Can we pursue expansion at the power plant in and around Zambia?
Are there more opportunities in power and mining lined up in neighboring African countries?
Ashwin Devineni
Yes.
So, I think whenever we evaluate projects, we look at the risk profile and the benefit that we're getting.
And after we have a very large presence in Zambia already with the Maamba Energy Limited.
We found that the investment climate is fairly good.
The rewards are fairly good.
While there is risk, the margins and rewards are good.
So therefore, we decided to expand a fair bit in Zambia.
Today, we are doing power generation.
In terms of mining, we're getting into lithium and possibly iron ore.
And on the agricultural side, we're doing avocados and sugar.
But needless to say, it's not just Zambia that we're looking at, we're also looking at the Ivory Coast, where we're looking at manganese in terms of mining and smelting and possibly power generation.
And we're looking at other countries too that offer a good investment climate where the risk is lower, but the margins are high.
Nidhi Shah
Do you see any specific countries in the African region, where you could possibly have opportunities to set up something?
Is there any bridge that has opened up?
Ashwin Devineni
Yes.
I think Ivory Coast and some of the other countries that we were possibly looking at are Botswana, Namibia, where the ratings of the countries are high.
They are English-speaking countries and it would make it easier for us to work for their rule of law.
So those are the different aspects that we look at and we're always looking at opportunities in these regions.
Nidhi Shah
All right.
Lastly, I had a bookkeeping question on the Maamba Energy Limited.
I can see in the slide that you've given separate financials for the energy business and for the mining business.
What I would like to understand is that, in the mining business, is the revenue being recognized where it is sold to third party or revenue from Maamba Energy Limited is also considered?
Secondly, does the energy business recognize that as a cost?
What is the accounting just between those 2?
I understand part of the consolidated level those would get nullified.
But between these two slides, could you help me understand the breakup?
Sultan A Baig
Even in Maamba Energy, when we present the Maamba Energy numbers, the revenue gets knocked off for the coal supplies from mining business to the energy Nava Ltd 14.11.2024
Moderator · Conference Operator
Thank you.
Next question comes from Harinath Reddy from PNR Investments.
Please go ahead.
Harinadh Reddy
Sir, my question coal mining.
Do we have any prefixed price purchase with our clients, or the coal mining business is prone to the global price fluctuations?
Ashwin Devineni
We don't have any prefixed agreements, long term agreements.
The reason is we don't want them.
One of the advantages of Zambia being landlocked too and logistics prices being high from the port is that we're not subject to global prices fluctuating.
I think there is a price set in Zambia and then we follow that with certain escalations due to increased fuel costs and so on.
But we get into shorter term agreements rather than longer term agreements there.
And they're all U.S. dollar denominated.
Happynadh Reddy
Okay.
Who fixes that, sir?
Ashwin Devineni
It depends on the market.
I mean, in terms of the supply demand, today, there are about 3-4 different suppliers of coal within Zambia apart from us.
And there's demand from various industries.
So that's how it works.
Harinadh Reddy
So I understand that it is more stable and consistent than the global prices.
Ashwin Devineni
It's just a lot more stable.
Harinadh Reddy
Ok, thank you sir.
That’s it from my side.
Moderator · Conference Operator
Thank you.
I request the participants to restrict with 2 questions in the initial round and join back the queue for more questions.
Next question comes from Shreegopal Kankani from S.G.
Kankani & Associates.
Please go ahead.
Shreegopal Kankani
My question is whether 150 x 2 megawatts power plant expansion will be executed in two phases or it is single stroke expansion?
Sultan A Baig
It is a single stroke expansion.
We are constructing both units together.
Shreegopal Kankani
Okay.
Is the deadline December 26?
Sultan A Baig It's August 26 Mr. Kankani.
Okay.
And what is the expected date of avocado project?
Nava Ltd 14.11.2024
Moderator · Conference Operator
Thank you.
We have a follow-up question from A M Lodha from Sanmati Consultants.
Please go ahead.
A M Lodha
Thanks for the follow-up opportunity.
I have only one question regarding the Nacharam land.
So, in Hyderabad, prices of land have gone up tremendously.
So, my suggestion is that instead of opting to sell the Nacharam land you can give 10 acre or 7 acre or 15 acres give to a developer and monetize the land over the period of 3-4 years.
Sultan A Baig
Your suggestion is noted, Mr. Lodha.
We'll consider it.
A M Lodha
Ok.
Thank you very much sir.
Moderator · Conference Operator
Thank you.
We have a follow-up question from Gargi Agarwal from Value Investments.
Please go ahead.
Gargi Agarwal
Sir, you mentioned some corporate action.
The money that you'll be using, it will go for growth capital as well as CapEx and corporate action.
So, is there any buyback on plan?
Ashwin Devineni
No. I think right now, we just announced the stock split.
So, we're always deliberating corporate actions when the time is right.
So today, the announcement that we made is about the stock split.
Gargi Agarwal
All right.
I missed the part where you laid out the CapEx plan for the next 2 years.
So, if you can give me the break up for the CapEx of various businesses that you plan to do for the remaining half of FY '25-26
Sultan A Baig
Yes.
It's USD 400 million for the Maamba Phase 2, USD 125 million for sugarcane integrated project, USD 45 million for the avocado project and USD 150 million for the Ivory Coast smelter project integrated with the biomass plant.
Gargi Agarwal
Yes, sir.
I have the total numbers.
But I wanted to know how you will split it between second half of FY '25 -26, and '27?
Sultan A Baig
It will depend upon the requirement of the funds for the project, ma'am.
Gargi Agarwal
Ok sir, thank you.
Moderator · Conference Operator
Thank you.
We have a follow-up question from Nidhi Shah from ICICI Securities.
Please go ahead.
Nidhi Shah
So, I wanted to ask about the investment climate in regard to energy.
Companies, like NTPC and Power Grid are coming up with huge capacities in the next couple Nava Ltd 14.11.2024
Moderator · Conference Operator
Thank you.
That would be the last question for the day.
Now I hand over the floor to management for closing comments.
Ashwin Devineni
In closing, I'd like to extend my sincere gratitude to each of you, your interest and continued support of Nava Limited.
As we look to the future, we remain focused on executing our strategic initiatives, particularly in expanding our energy capacity, advancing agricultural ventures and reinforcing our financial position.
With a steadfast commitment to sustainable growth and operational excellence, we are confident in our ability to seize new opportunities and continue to create meaningful long-term value for all stakeholders.
Thank you all for joining us today.
We look forward to keeping you updated on our progress.
Please feel free to reach out to our Investor Relations team should you have any further questions.
Thank you.
Moderator · Conference Operator
Ladies and gentlemen, this concludes your conference for today.
Thank you for your participation and for using Door Sabha's conference call service.
You may disconnect your lines now.
Thank you and have a good day.
Note
1.
This document has been edited to improve readability and 2.
Blanks if any, in this transcript represent inaudible or incomprehensible words.
Questions and answers
Nava Ltd 14.11.2024
ANA RAJU · Research Analyst
MR. ASHWIN DEVINENI – CHIEF EXECUTIVE OFFICER – NAVA LIMITED MR. NIKHIL DEVINENI – EXECUTIVE DIRECTOR – NAVA LIMITED MR. GRK PRASAD – EXECUTIVE DIRECTOR – NAVA LIMITED MR. SULTAN BAIG – CHIEF FINANCIAL OFFICER – NAVA LIMITED MR. VSN RAJU – COMPANY SECRETARY – NAVA LIMITED
Moderator · Conference Operator
MR. MOHIT KUMAR – ICICI SECURITIES Nava Ltd 14.11.2024
Thank you, sir.
Ladies and gentlemen, we will now begin the question-and-answer session.
If you have a question please press * and 1 on your telephone keypad and wait for your turn to ask the question.
If you would like to withdraw your request you may do so by pressing * and 1 again.
First question comes from A M Lodha from Sanmati Consultants.
Please go ahead.
Nava Ltd 14.11.2024
VSN Raju · Research Analyst
Mr. Lodha, I think you can join back in the queue.
We'll take your questions later.
Moderator · Conference Operator
Thank you.
I request the participants to restrict with 2 questions in the initial round and join back the queue for more questions.
Next question comes from Vignesh Iyer from Sequent Investments.
Please go ahead.
Vignesh Iyer
Thank you for the opportunity and congratulations on a good set of numbers.
My first question is that any receivable that is pending, can you convert it into equity, for the new 300-megawatt project?
As in the receivable getting converted wherein, they instead of paying us, it gets converted into equity and they put up the fund in realization of that USD 200 million which was pending.
So I want to ask is it still under discussion?
Or will the revenue get recognized like USD 5 million per month?
Sultan A Baig
Mr. Iyer, your understanding is not correct.
Receivables are not getting converted into equity.
So when Maamba Energy received the receivables and it distributes to Nava Ltd 14.11.2024