NAVA — earnings call
The transcript as filed. Every paragraph is addressable: its link names the page and the position it sits at in the call.
Prepared remarks
Moderator · Conference Operator
MR. MOHIT KUMAR -- ICICI SECURITIES Nava Ltd
The next question comes from the line of Govind Gilada, an individual investor.
Govind Gilada
I got only one question.
The dollar has appreciated almost 4% from our last quarter, INR83 average.
So, how it will impact our profitability?
I hope this electricity payments, Zambia, we receive in dollars.
I am right, sir?
Ashwin Devineni
Yes.
The PPA that we have in Zambia is dollar denominated.
In fact, even the coal sales that we report in Zambia, we charge in collecting dollars.
Nava Ltd
Moderator · Conference Operator
The next question comes from the line of Gargi Singh of Value Investment.
Please go ahead.
Gargi Singh
Yes, sir.
So, my first question is with regards to the avocado business.
In last quarter concall, you had said that there will be plantations of total 1.92 lakh trees in the 1,100 hectares of land by November 2024, but in today's update we have seen that only 130,000 trees have been planted as of now.
So, some highlights on why is there a delay?
Sultan Baig
Ma'am, there is no delay on that.
So, Division A, we have about 95,000 trees already planted.
Division B, another 100,000 trees the plantation is ongoing.
We said that our plantation will commence from December, it will go on till March.
So, as on today we have finished, of course, 35,000, 40,000 trees and balance 60,000 trees will be planted by March.
There is no delay.
The plantation follows the rainy season.
So, currently, plantation is going on.
Gargi Singh
Okay.
Sir, second question is with regards to the same.
So, on a per ton basis, if you take realizations of 180,000 per metric ton, so is it a fair understanding that the revenue potential from the entire 1.92 lakh trees is INR400 crores after the plant matures and, of course, the PAT from the revenue of INR400 crores is INR150 crores?
Sultan Baig
Ma'am, these numbers are too premature to calculate.
Basically, it is not possible at this juncture to calculate revenue per tree and which revenue comes when the plant matures.
So, it is too early to put these numbers in crores now and it also depends upon the avocado market globally.
Gargi Singh
Yes, but you have announced an investment of $45 million.
So, while making an investment, I am sure you must have done some rough estimates with regards to what kind of return you are expecting from this investment.
So, I understand that the pricing scenario and everything will vary because the maturity will take 2 to 3 years.
But some sense on, from your investment of $45 million, what is your calculation as to what kind of returns you are expecting from this?
Nava Ltd
Moderator · Conference Operator
The next question comes from the line of Shree Gopal Kankani from S.
G.
Kankani & Associates.
Please go ahead.
Gopal Kankani
Good afternoon sir to all of you.
I just wanted to know this 100 megawatt solar power plant which you have proposed to install.
What is the expected rate of commissioning of this plant and what will be the tariff? whether PPA has been executed with Zambia ZESCO?
Ashwin Devineni
No. So, as we mentioned in our release, it is a very premature stage.
I think MEL has formed a subsidiary called Maamba Solar Energy which plans on executing this 100 megawatt solar plant.
Currently, all the studies are being done in terms of what technology we use, the techno- feasibility study, the grid stability study and also discussions and negotiations with ZESCO on the commercial.
So, once something materializes in the next few months, we will report it to the wider community.
Gopal Kankani
Okay.
My second question regarding existing 300 megawatt power plant expansion Phase 2.
So I think the expected date of commissioning of this expansion is August '26 or December '26?
Ashwin Devineni
It's August '26.
Gopal Kankani
August 26.
Sir, what is the present tariff for existing power plant?
Moderator · Conference Operator
Sorry to interrupt.
Shree Gopal, I would request you to rejoin the queue as you're done with your two questions.
Gopal Kankani
Okay.
Thank you.
Moderator · Conference Operator
The next question comes from the line of A.M.
Lodha from Sanmati Consultants.
Please go ahead.
Nava Ltd
The next question comes from the line of Viraj Mahadevia from MoneyGrow India.
Please go ahead.
Viraj Mahadevia
Congratulations for the stable results.
I had a question regarding the revenue dip in this quarter.
Was it largely driven by the operational maintenance at the India level power plant?
Sultan Baig
Yes, that's correct.
Viraj Mahadevia
Okay.
And is that operational as of Q4 now?
Is the maintenance complete?
Sultan Baig
Yes, it's complete and it's operational.
Viraj Mahadevia
Okay.
My second question, Ashwin, is to you regarding the shareholder-friendly actions that you mentioned in the past as now the company has become debt-free and payments from the Maamba subsidiary have begun.
Do you expect to see some of this happening in this year either through dividends, special dividends, etcetera?
Ashwin Devineni
Yes, definitely.
I think we're always happy that, number one that now Singapore is getting repaid its entire shareholder loan and plus more in the next few months hopefully.
Definitely, I think as a company we are evaluating certain actions that we may take and intimate to the wider group soon.
Viraj Mahadevia
Okay.
Thank you all the best.
I will come back with any more.
Moderator · Conference Operator
The next question comes from the line of Vignesh Iyer from Sequent Investments.
Please go ahead.
Nava Ltd
The next question comes from the line of Gargi Singh from Value Investment.
Please go ahead.
Gargi Singh
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?
Is $45 million the amount for entire 4 lakh trees?
Sultan Baig
The $45 million investment is for the plantation as well as developing the pack house and the related infrastructure.
Gargi Singh
Sorry, sir.
I could not understand.
Is it for the entire 4 lakh trees?
Ashwin Devineni
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.
Gargi Singh
Okay.
Understood, sir.
Second question is to Mr. Nikhil on the ferroalloys business.
So, sir, I wanted to understand how is the profitability of the ferroalloys business in India now?
So, in this quarter, we have reported around INR7 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?
Nikhil Devineni
As you rightly pointed out, things are looking up.
Quarter 3 was particularly subdued for silicomanganese wherein, the fixed cost recovery was becoming a huge challenge.
Whereas, in Nava Ltd
Moderator · Conference Operator
The next question comes from the line of Nidhi Shah from ICICI Securities.
Please go ahead.
Nidhi Shah
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?
Ashwin Devineni
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 tariff of $0.095 for the expansion.
Nidhi Shah
Okay.
I heard about the PPA and 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?
Nava Ltd
Moderator · Conference Operator
The next question comes from the line of A.M.
Lodha from Sanmati Consultants.
Please go ahead.
A.M. Lodha
I have two questions.
One related to silicomanganese.
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?
Ashwin Devineni
Yeah, 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.
A.M. Lodha
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 the domestic power rates go up so as our domestic power business can do something for the company?
Ashwin Devineni
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.
Nava Ltd
Moderator · Conference Operator
The next question comes from the line of Aryan from CIM.
Please go ahead.
Aryan
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?
Sultan Baig
So, we have published standalone and consolidated separately, Mr. Aryan.
Standalone energy revenue is INR204 crores and consolidated energy revenue is INR3,513 crores.
Aryan
Okay.
Moderator · Conference Operator
The next question comes from the line of Govind Gilada, an individual investor.
Please go ahead.
Govind Gilada
Thanks for giving an opportunity again.
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?
Ashwin Devineni
So, what we have received this quarter is USD43 million.
So what is pending or what is due is USD160 million.
Govind Gilada
USD160 million.
Sultan Baig
Yes.
Govind Gilada
It means that regularly we are receiving USD5 million and another some USD28 million, we have received extra other than the regular what they were giving.
Is my understanding correct, sir?
Ashwin Devineni
No, as I mentioned during the last call, the payment plan is dynamic.
We are in constant discussions with ZESCO.
So it's not USD5 million a month anymore.
It's when they get lump sum payments, we take that.
So that's exactly why we received USD43 million during the last quarter.
And we hope we will receive large payments in the months moving forward.
Govind Gilada
Great, sir.
Happy to know that.
Thank you very much.
Moderator · Conference Operator
The next question comes from the line of Gargi Singh from Value Investment.
Please go ahead.
Gargi Singh
Yes sir.
Thank you again.
Sir, a bit of colour 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?
Ashwin Devineni
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 Nava Ltd
Moderator · Conference Operator
The next question comes from the line of Viraj Mahadevia from MoneyGrow India.
Please go ahead.
Viraj Mahadevia
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, both at Maamba and at the India plants?
Ashwin Devineni
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.
Viraj Mahadevia
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?
Ashwin Devineni
Sugar is another one, which we are actively pursuing in Zambia, which is adjacent to the avocado plantation.
Viraj Mahadevia
And what is the timeline of that?
Ashwin Devineni
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 itself, if things go as 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.
Viraj Mahadevia
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?
Nava Ltd
Moderator · Conference Operator
Thank You.
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.
Ashwin Devineni
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.
Moderator · Conference Operator
Thank you, sir.
Ladies and gentlemen, on behalf of ICICI Securities Limited, that concludes this conference.
You may now disconnect your lines. ____________________________________________________________________________________________________
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 Limited
Moderator · Conference Operator
Thank you, sir.
We will now begin the question-and-answer session.
If you have a question, please press * and 1 on your touchtone telephone and wait for your turn to ask the question.
If you would like to withdraw your request, you may do so by pressing * and 2.
Participants are requested to limit the number of questions to 2 and rejoin the queue for further questions.
Ladies and Gentlemen, let us wait for few moments until the question queue assembles.
The first question comes from the line of AM Lodha from Sanmati Consultants.
Nava Ltd