Vedanta Aluminium Metal Limited (VAML) Q2 2027 Earnings Call Transcript

Ladies and gentlemen, good day, and welcome to Vedanta Aluminium Metal Limited's Q2 and half-year FY2627 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 touchstone phone. Please note that this conference is being recorded. From the management side, we have Mr. Charanjeet 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 Ltd. Q2 FY27 earnings update. BAMR delivered a quarter of record production, higher value-added volumes, and a strong financial performance. Aluminum production reached an all-time high of 649,000 tons, up 5% year-on-year, and 3% up 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 Lanziger and increase in metal volume from Balco Portline 3, which will come to full capacity by the end of this year. At BALCO portline 3, currently 50% of the ports are in full production, and we will reach the full capacity run rate by end of this year. Alongside this, WAMR 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 Karnapat bauxite block, driving captive bauxite security, while Kudloy and Ghogarpali will increase the captive coal contribution. As we scale our operations, our focus remains on discipline, 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 aluminium. We are also conscious of our environment footprint, and we have increased our renewable energy mix from 321 megawatts in Q1 to 367 megawatts in Q2, in H1. And in the whole financial year, we want to have a RE mix of more than 400 megawatts. We are also looking towards a sustainable requirement or consumption of our fly ash into cement and many other areas like road construction. So, overall, we have strengthened our governance in terms of the sustainability, and we have secured the second position in the DSJ 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 Rs. 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 2 stood at $1.1722, up 1% quarter-on-quarter, with the structural benefit in Aluna cost been offset by continuing inflationary pressures on carbon and fuel oil. Our marketing mix crendened 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 10,192 crore, up 83% year-on-year, and lower 3% sequentially. Profit after tax stood at Rs. 6187 crore, more than doubling YOY. Sequentially, profit after tax was almost flat, but for the exceptional charges of around Rs. 400 crore, recognized in quarter two. We maintained a healthy cash and cash equivalent of Rs. 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 Kricil have reaffirmed our AA plus ratings with a stable outlook, while India ratings has now upgraded Vedanta Almonium to AA plus stable. These ratings reflect the strength of our earnings, improved leverage profile, and continued financial discipline. Our return on capital employee stood at 60%, underscoring our commitment to profitable growth and prudent capital allocation. We have also paid a dividend of Rs. 8 per share during the quarter, translating into a dividend yield of 2%, balancing shareholder returns with continued investment in our growth and integration process. Turning to the EBITDA bridge, quarter to EBITDA stood at Rs. 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 waste has been majorly offset by higher volumes and other operational factors. On the net debt, we have reduced the net debt by Rs. 3,090 during the quarter from Rs. 29,532 at the end of quarter one to rupees 26,442 crore at quarter end after accounting for dividend payment of rupees 3,190 crore. Importantly, the reduction in net debt was underpinned by cash flow of rupees 6043 crore during the quarter. This demonstrates the cash conversion strength of the business even after funding CAPEX. During the quarter, we refinanced more than rupees 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 FY31 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 remain broadly in line with quarter one. Beyond the reported financial, 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 aluminium capacity, supported by the ramp-up at Balco and Lanzigar. At the same time, the commissioning of our bauxite mines and captive coal will progressively strengthen raw metal security and lower our structural cost base. Post-completion of the project and the de-bottlenecking, we are targeting a hot metal cost of around $15.50 per ton and a value-added product mix of more than 90%. These leave us, 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 billion ton production capacity, Vamal would rank among the largest global producers, while Indian market offers exposure to an estimated 40% demand growth between calendar year 2025 and calendar year 2030. With the commissioning of the second zone at Balko, we are now poised to operationalize the third and final zones in quarter 3, quarter 4 to reach the target run rate of 435 kTPA by mark exit. On our Almuna production, we are targeting a 10% incremental refinery output, each in quarter 3 and quarter 4, thereby ending the year at a design capacity. This would mean 85% captive Almuna mix as we exceed the year. And also, with OMC expansion and CIGMA League startup, we expect the captive box size to go up from 40% today to around 75% as we did the year. So, we have some planned power plant shutdowns in quarter three. Post that, we expect the power cost to come down to the Q1 level. Additionally, we are also targeting operationalization 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 presence being seen on account of the Middle East disruption would further augment the savings. At current LMEs, along with the planned value-added product, the expected cost levels, we expect to exceed 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, planned shutdowns. On the hedging front, for the balanced year, we are hedged 22% of our volumes at an average price of $3.274 per ton. In closing, Vedanta Almonium'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 1 on their touchstone phone. If you wish to remove yourself from the question queue, you may press star and then 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles.

This question comes from the line of Indrajit Agarwal with CLFA.

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 $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 KPX dividend, how do you understand that?

We expect that even after accounting for the cash of around 6,000-7,000 crores, we will be left with 50% of the cash, you can assume, around 25,000-odd crores, and even on a standalone basis, 17,000-18,000 crores. Now, this 17-18,000 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've been guiding that based on the market cap, one can assume a 3 to 5% broadly the dividend every year. So, Ingrid, I hope I have answered your questions.

When can we expect the new projects to start incurring CAPEX in terms of the further expansion?

So, we are in very advanced stage of the acquisition of land, both for the refinery as well as the smelter. So, basically, once the land acquisition happens, the other part of the team is making on the drawing board the layout of the facility. So, that's also done. So, once we are more or less closer to the acquisition of the land and the paperwork is done, Then we can, you know, 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. So we have a potential to execute things very rapidly and very quickly, and we will be, once the LAN 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.

And lastly, on your coal and bauxite mine, at the current run rate, how confident are we of commissioning or getting some mineral out of Gogarpali and Sijimali by this fiscal year? And also, we find that no update of Radhikapur is there in this PPT. So, any changes over there?

Yeah, so the order is that we have got several coal mines. The 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 Kudloy. That is the coal mine, which is around 30 kilometers from Jharsuguda. And then the third mine which we will start is Ghogarpali, which we plan to do in the last quarter of this financial year. And in addition to that, Radhik Kapoor 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 5000 megawatts. So, Radhikapur is for that. So, we have a very, you know, detailed way on which how the incoming and material and coal and 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'll come back.

Thank you.

Thank you.

Your next question comes from the line of Samangal Nivatya with Kotec Securities. Please go ahead.

Yeah, good evening. So, first, continuing on CGMRI, can you share what is the likely cost delivered at the refinery versus external box site, and what could be the cost saving once the mine ramps up?

See, Jibali cost currently would be close to $60, because if we start the mine early, we get 50% rebate on this, which will continue for the next one and a half years. Subsequently, it will be at par with other domestic sources.

And Sumangal, this, Anup, this side, and Seiji Mali basically will be replacing the imported box site, and one can assume, assuming $60, we will have a saving of $25 per ton of the box site.

Understood. So, this year, 1, next year, FY28, 5, and then it ramps up to 9 and 12. Is that the trajectory for next 3-4 years?

So, Sumangal, see, we have an EC of 9 million. One is what Rajiv has mentioned we are doing this year. Next year, 5 to 6, and then, yes, 9. 9, and then we can increase it to, you know, 40% more. But that will be the trajectory going forward.

Got it. Got it.

The second question is with respect to the recently one mine, Karlapath. 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 C.G. Malibu.

So, 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 the Udisha. And given our expansion plans around the smelter and the refinery, it made a lot of sense for us to secure that. Okay, so that was on the rationale. Coming to the cost, now you just see what are the options with us. One, of course, the captive mine, Siddhi Madhi, that we have, and Karni Purna, what we have acquired, that will broadly cater to the existing refinery. Now, the other sources are only the Guinea-based box size. And given the geopolitical situation there and the high cost, it always made sense for us to secure the local box size. So, we have done some match, even with whatever premium we are saying. We believe we will be able to generate Almuna as and when we start the mine below $400. So that is the whole match around this.

Got it. Got it. One question I have on the expansion. So 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 1,010,000 at a time? Or if you could share what configuration we are looking at and some color on capital intensity.

So, 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 that 25% to come. So, capacity will come in phases, but we have to do the whole project together, and cost-wise also. So, we plan to replicate the latest pot line, which we have put in Barco, of 525 kiloampere. I think this is the largest kiloampere pot size current-wise outside China, and we have had a very good experience over there. We rammed up at a rate of more than 2 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, you know, do it at the similar level. In this case, also, there will be some additional, but this is, I'm 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, you know, 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'll join the queue back. Thank you, and all the best.

Thank you.

Our next question comes from the line of Sanjay Parekh with Soham Asset Managers Private Limited. Please go ahead.

Yeah, no, congratulations on commendable performance. My simple question was, you know, because we are saying that we're going to have dividends of 4% to 5%, and the stock is significantly undervalued, you know, As you can see, most of the estimates, four times, four, four and a half times, 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's a very, very right time to exhaust the equity, which will be exhausted for life. So, that's just a suggestion.

So, 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. So, we are aware of the return that you mentioned, and we are also aware of the buyback options that you are talking about. And they will be considered as and when by the board.

Thank you. Thank you. And secondly, just to follow, you know, this 3 billion ton expansion that Chairman has said, And you did explain that it is at a drawing board level, and of course, but once you decide, my question was, first is, I just missed if the land equation 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. But just in case if it's a $3 million expansion fully integrated, what will be the capital cost of that? And once you decide, what could be the timeline?

So, as I already alluded to, we have applied for land to the government, and it is under a very advanced stage of allotment, and we are awaiting for this allotment. See, we need around 1,450 acres at Kamathya Nagar and Dhimkanal for the smelter, and similarly, 400 acres at Kalyan Singhpur for the refinery. So, all that we have, you know, public hearing and things like that have happened for the refinery, and for that application, we have given for the smelter. So, 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 eight, seven lines of the same configuration of 525 kilo amperes, which we just implemented at Balco. So, a lot of it will be, you know, replication for us of what we have already done. And 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, fantastic. And what is your assessment of global demand supply in the next two years?

So, 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 FY27, 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 FY27 on prices.

Okay, great. Congratulations on, again, great set of numbers. Thank you. Thank you.

Your next question comes from the line of Vikas 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. So my first question pertains to the cost inflation, which we might can see in the 3Q, given alumina power, you are saying there is a shutdown. So how should we look at it and also on the aluminum premiums, which we can get in the next quarter, if you could throw some color on that?

So, Vikas, first covering the cost, and I think I covered it in the commentary that, see, H1, we did about $1,710 per ton hot metal cost. H2, broadly, we should be around the same level, so slightly lower. However, quarter 3, because of the shutdowns and the carbon that I mentioned, one can expect a 4% or so cost increase compared to quarter 2. On your second question on the NEP, and I think that is driven more by the lower QMJP that we have seen this quarter, okay, we believe that at this QMJP compared to the 410 and the Compared to 425 odd dollar NEP that we did, we should be about 50 dollars lower in H2. The QMGP would account for 70 odd dollars, and the balance would be made up through increased WAP and the domestic sales.

Not at all. So, my second question again pertains to our long-term CapEx plan. As I see that the BALCO facilities, what where the cash lies at this point of time, while the debt is with wealth. But BALCO, we had only 51% say. So just wanted to understand your thought process, whether the first million ton or an integrated plant, whatever you are going to set up, either it's the 1 million ton into 3 or the 3 million ton one single plant, And how the cash fungibility between these two entities would come in handy in terms of the capex?

So, Vikas, let me first answer on the earnings. See, I mentioned it at, say, about 45,000 to 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. So, in the standalone itself, okay. And if I did some math and gave the number that somewhere around 18,000 to 20,000 crores of the cash at this EBITDA, you can send it in the standalone. So 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. See, the cash at BALCO, as and when we finalize the project, all the options are on the table. See, we will look at structuring that point of time. Maybe some capex can come in the BALCO or things like that. But on a standalone basis, also, based on the earnings that we see, we believe we have sufficient cash to manage the forthcoming expansion as a minute is announced.

Noted, sir. Thank you and all the best of you, sir.

Thank you.

Thank you.

Your next question comes from the line of Shweta Dixit with Systematics. Please go ahead.

Hi, good evening, sir. And congratulations on a good set of numbers. So my question pertains to C.G. Mali. 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? How are we targeting a one-variant number within this year?

So, I mentioned that bauxite production is, you know, mining is simpler than coal mining because the stripping is very less and you have to mine from the surface. The more the concern is managing the villages and the local stakeholders. So 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 Nanjigarh 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. So, we want to create that positive impression that with our mining, there will be further, you know, development in the region. But there are, you know, forces which you all are aware from the media. So, we are treading the path very, very carefully.

The line for the current participant has been dropped from the queue. We'll move on to our next question. Our next question comes from the line of Ashish Kejriwal with Nuama Institutional Equities. Please go ahead.

Yeah, hi. Good evening, everyone. Thanks for the opportunity. So two questions. One, Gogarpalli, where we are in terms of securing regulatory clearances? Because you mentioned Q4F527, which means that you should have received all the approvals by now. So where we are in terms of that status? And secondly, in terms of OMC, the high court order for which we have already won for Supreme Court, what's the status on that? And are we planning to increase our sourcing of block size from OMC in second half and next year? Thank you.

So, coming to Gogarpalli, 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 Bhogarpani. 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's sub duties.

And to your point on the increased volume, see, yes, you're right. See, OMC is in the process of expansion of its mine from 3.6 million tons to 6 million tons, 80% of which, as per their LTL policy, is reserved for refineries in Odisha, and we will definitely target higher production, higher upliftment going forward.

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 subjudiced, what we did was, since we are continuing to lift, under protest, we are lifting at the price determined by them. But the matter is subjudiced, as we said, and adequately covered in the notes to accounts, point number 12 in the notes to. Okay, okay.

Thank you so much, sir, and all of a sudden.

So, if you can give a similar estimate, let's say over the next couple of years till F529, how much pertain cost saving will come from both coal as well as renewable, and what percentage of your power will be renewable by F528, F529? So, my first question to this.

See, so you're aware that in our existing operation, around 500 megawatt of RE power is what we've contracted with Serentica. And if you look at our existing ones, once all of that get commissioned, we will be about 10 to 12% of the of the requirements. We want to increase this to maybe 25% as we go into say FI 29, FI 30, as you mentioned. And on the cost saving now, I will reiterate what we said. In the near term, we are looking at a hot metal cost of around $15-$50, say about $150-$175 lower compared to the H1 levels. 100-125 odd dollars should come from Almona bauxite, even with the partial ramp-up, maybe 30-35 dollars as a ramp-up Ghogarpalli, because that is the cheapest mine, because we will have to also see that whatever coal we have, even from the coal in India, they are at a reasonably auctioned price that we require. So, we will always look at it as a basket and depending on the need, we will source. And of course, when you have some middle list disruption getting eased up, we should see another 50 odd dollars from there. And saving on a drawing board, we have the initiatives worth 200 odd dollars. We expect to have a 100, 125 as we have in 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? You know, I believe 28% at $3,000 were hedged. For second half, have you made any changes? And last quarter, we had some hedging loss because LME was higher. Has there been any reversal this quarter or the prices were still higher than the hedged price?

Let me first talk about our approach on hedging. Okay, so 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. Now, if we look at the hedges that we have currently, outstanding, for the balance of FY27, we are hedged around 22% of our volume at an average LME of $3,274 per time.

Understood, sir. Thank you. I'll run back with you, sir.

Clio Capital, please go ahead.

Thanks for the opportunity, and 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 on an ongoing basis?

Can you repeat your question?

You are asking how much will it impact on an ongoing basis? See, I'll tell you. Please understand. And I had covered it, I believe, earlier also. See, we had started doing additional provisioning at the beginning of this year. Okay. Now, in the accounts, one will see that we are broadly providing it at, say, 3,000 rupees. While the matter is subsidies, and the latest price, even if one were to take the OMC, is 1,000 rupees, which means that hardly 8, 10 dollars. So, that's the hit part of it. Now, you look at the savings that we will get. We get about 2.4 million tonne of OMC bauxite, which can go up to 4.8 million or even higher. And the saving there will be around $15 per tonne. So, if you do the maths now, I am saying, the maths will be in favour 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?

So as already covered, we plan to have a greenfield expansion of 3 million tons of aluminium and refinery of 6 million tons. So that is for which we have applied for land at Kamakhya Nagar. So, and we are in discussion with the government to secure the land for Kamakhya Nagar and also public hearing, as we speak, is happening for the refinery at Karyan Singapur. So, these are under very advanced stages of approvals. And in addition to that, we already have on the drawing board done the layout. So, 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?

So, typically, if we look at the Banco project, the capex cost was close to $2,100 per ton of capacity addition. We plan to be at similar level, and this is only for the aluminum production smelter part, I'm 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. So, we will be exploring various options. Sir, this $2,100 for aluminum refinery or including the back-end aluminium? No, this is for the aluminium. Balco project, I am telling the capex cost per turn of aluminium capacity. That is, for 435,000 tons, we did at a capex cost of $2,100 per ton.

Okay, thank you.

Before we take the next question, a reminder to all the participants, you may press star and then want to ask a question. The next question comes from the line of Yashko Kareja with Systematics. Please go ahead.

Can you hear me now? Yes, sir, please.

So, as I mentioned, the domestic demand remains very, very robust, and the growth which is happening in the country, in the power, in the transportation, in lightweighting, and many other areas, we see a very big upside. As regards 26 is concerned, there is a supply deficit. But going forward, it's 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'm 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 to 1.4 million in the later half of FY27.

Got it, sir. Yeah, that was helpful. And so my second question is, also, could you help us with the, how much would be that interest liability in the OMC demand?

See, based on the debit note, and let me reiterate that, see, it is contingent upon the case that we filed in Supreme Court, and Rajivji talked about it. They have raised the demand, and around 1,100, 1,200 crore is the interest portion that they've demanded, as per their calculations.

Yeah, okay. Got it. Yes. Thank you so much.

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 Y on Y. Could you just elaborate on this?

We had our capacities coming up. So, I don't remember us guiding that we will be lower in Q2. We will higher.

Yeah, yeah, yeah. Can you elaborate? Please, can you elaborate? We are talking about the cost or the volume part of it?

The cost part. Sorry, not the cost, the production part. So, 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. And 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% to 5% increase each and every quarter going forward, just to clarify.

Okay, so 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 Illumina?

I thought I covered it. I'll reiterate. Okay. So we are looking at, on a drawing board, we look at a cost reduction of $200. Under it, $225, as I mentioned, should come from the increase in captivity valvuna and the domestic bauxite. $30-35 from the coal, as we ramp up, Ghogarpalli and other coal mines. And the balance, because you can see, the Middle East escalations 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.

One 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. Our, both the assets which we have at Jharsuguda and Balco, Balco plant sits in Korba, which is the, you know, 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. So, for us, you know, sourcing coal has not been as much a problem as other players, given the distance that the mine is hardly 20-25 kilometers 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. So, while the country as such has seen a lot of turbulence in terms of coal, but Vamal per se has been insulated in terms of coal for our power operations.

That's right, everyone. 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.