Q1 2027 Hindalco Industries Ltd Earnings Call

August 7, 2026

Speaker #1: Ladies and gentlemen, good day and welcome to the earnings conference call of Hindalco Industries for the first quarter results of FY27. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes.

Operator: Ladies and gentlemen, good day and welcome to the earnings conference call of Hindalco Industries' Q1 results for FY27. 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 then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Subir Sen, Head of Investor Relations at Hindalco. Thank you, and over to you, Mr. Sen.

Speaker #1: Should you need assistance during the conference call, please signal an operator by pressing star, then zero, on your touchtone phone. Please note that this conference is being recorded.

Speaker #1: I now hand the conference over to Mr. Subir Sen, Head of Investor Relations at Hindalco. Thank you, and over to you, Mr. Sen.

Speaker #2: Thank you, and a very good morning and evening to everyone. On behalf of Hindalco Industries, I welcome you all to the earnings call for the first quarter of financial year 2027.

Subir Sen: Thank you. A very good morning and evening, everyone. On behalf of Hindalco Industries, I welcome you all to the earnings call for Q1 of financial year 2027. In this call, we refer to the Q1 financial year 2027 investor presentation posted on our company's website. Some of the information on this call may be forward-looking in nature and is covered by the safe harbor language on slide number two of the said presentation. In this presentation, we have covered the key highlights of our consolidated performance for Q1 of financial year 2027 versus the corresponding period of the prior year. A segment-wise comparative financial analysis of Novelis and Indian Aluminum and Copper business is also provided. The corresponding segment information of prior periods have also been reinstated accordingly for a comparative analysis.

Speaker #2: In this call, we'll refer to the first quarter of financial year 2027 investor presentation, posted on our company's website. Some of the information on this call may be forward-looking in nature, and it's covered by the Safe Harbor language on slide number two of the said presentation.

Speaker #2: In this presentation, we have covered the key highlights of our consolidated performance for the first quarter of financial year 2027, versus the corresponding period of the prior year.

Speaker #2: A segment-wise comparative financial analysis of Novelis and the Indian Aluminium and Copper Business is also provided. The corresponding segment information for prior periods has also been reinstated accordingly for comparative analysis.

Speaker #2: Today, we have with us on the call from Hindalco's management: Mr. Satish Pai, Managing Director, and Mr. Bharat Goinkar, Chief Financial Officer. From Novelis's management, we have Mr. Steve Fisher, President and CEO, and Mr. Dev Ahuja, Chief Financial Officer.

Subir Sen: Today, we have with us on the call from Hindalco's management, Mr. Satish Pai, Managing Director, and Mr. Bharat Goenka, Chief Financial Officer. From Novelis' management, we have Mr. Steve Fisher, President and CEO, and Mr. Dev Ahuja, Chief Financial Officer. Following this presentation, this forum will be open for questions and answers. Post this call, an audio replay will also be available on our company's website. Now let me turn this call to Mr. Pai to take you through the company's performance and key highlights in Q1 of financial year 2027.

Speaker #2: Following this presentation, this forum will be open for questions and answers. After this call, an audio replay will also be available on our company's website.

Speaker #2: Now, let me turn this call to Mr. Pai, who will take you through the company's performance and key highlights in the first quarter of financial year 2027.

Speaker #3: Thanks, Subir. Good morning and good evening, everyone. Thank you for joining Hindalco's earnings call today. On slides five to nine of this presentation, you can see our achievements and progress across quarterly metrics of safety and sustainability for this quarter versus prior periods.

Satish Pai: Thanks, Subir. Good morning and good evening, everyone. Thank you for joining Hindalco's earnings call today. On slides five to nine of this presentation, you can see our achievements and progress across quarterly metrics of safety and sustainability for this quarter versus prior periods. I will now take you through the key highlights of these initiatives. At Hindalco, safety is always our highest priority, and I am pleased to report that there were no fatalities this quarter across all our Indian operations. Our LPIFR for this year stands at 0.21, showing significant improvement over the prior period. As a significant step, we have strengthened our emergency response capabilities through realistic scenario-based mock drills conducted in collaboration with key agencies, including NDRF. These exercises help our team sharpen their response coordination and decision-making during critical situations.

Satish Pai: Thanks, Subir. Good morning and good evening, everyone. Thank you for joining Hindalco's earnings call today. On slide five to nine of this presentation, you can see our achievements and progress across quarterly metrics of safety and sustainability for this quarter versus prior periods. I will now take you through the key highlights of these initiatives. At Hindalco, safety is always our highest priority, and I am pleased to report that there were no fatalities this quarter across all our Indian operations. Our LPIFR for this year stands at 0.21, showing significant improvement over the prior period. As a significant step, we have strengthened our emergency response capabilities through realistic scenario-based mock drills conducted in collaboration with key agencies, including NDRF. These exercises help our team sharpen their response coordination and decision-making during critical situations.

Speaker #3: I will now take you through the key highlights of these initiatives. At Hindalco, safety is always our highest priority, and I'm pleased to report that there were no fatalities this quarter across all our Indian operations.

Speaker #3: Our LPIFR for this year stands at 0.21, showing significant improvement over the prior period. As a significant step, we have strengthened our emergency response capabilities through realistic, scenario-based mock drills conducted in collaboration with key agencies, including the NDRF.

Speaker #3: These exercises help our team sharpen their response coordination and decision-making during critical situations. We also took a proactive step toward preventing incidents by implementing the Risk AI Advisor, which helps us identify potential serious incidents at an early stage.

Satish Pai: We also took a proactive step towards preventing incidents by implementing the Risk AI Advisor, which helps us identify potential serious incidents at an early stage. By combining technology with on-ground vigilance, we are improving our ability to anticipate risks, intervene early, and create a safer working place for everyone. At Hindalco, we continue to make strong progress on circularity and responsible waste management. This quarter, 80% of all total waste generated was recycled or reused, indicating strong waste management performance. We achieved 142% recycling of bauxite residue excluding Utkal, 95% recycling of ash, and 127% recycling of copper slag this quarter. Let me briefly touch upon our circularity initiatives. Demand for fly ash and bauxite residue remains strong across cement, road construction, and quarry backfilling applications. Fly ash dispatches were temporarily impacted by the rail rake availability.

Speaker #3: By combining technology with on-ground vigilance, we are improving our ability to anticipate risks, intervene early, and create a safer workplace for everyone. At Hindalco, we continue to make strong progress on circularity and responsible waste management.

Speaker #3: This quarter, 80% of all total waste generated was recycled or reused, indicating strong waste management performance. We achieved 142% recycling of bauxite residue, excluding Utkal.

Speaker #3: 95% recycling of ash and 127% recycling of copper slag this quarter. Let me briefly touch upon our circularity initiatives. Demand for fly ash and bauxite residue remains strong across cement, road construction, and quarry backfilling applications, although fly ash dispatches were temporarily impacted by rail rake availability.

Speaker #3: A key milestone was the Dallas stone quarry backfilling project, the first initiative of its kind in India, supporting degraded forest restoration while contributing to the creation of additional carbon sinks.

Satish Pai: A key milestone was the Dalla Stone Quarry backfilling project, the first initiative of its kind in India, supporting degraded forest restoration while contribution to the creation of additional carbon sinks. In our copper business, recycling of copper slag continues to gain traction, driven by demands from the abrasives and ready-mix concrete industries. Together, these initiatives demonstrate how we are turning industrial byproducts into valuable resources while advancing our sustainability goals. We have made consistent progress in improving water efficiency across our operations through a series of focused interventions, such as adoption of zero liquid discharge systems, optimization of cooling tower operations, and reuse practices. These initiatives have helped us significantly reduce dependence on fresh water sources while improving overall process efficiency.

Speaker #3: In our copper business, recycling of copper slag continues to gain traction, driven by demand from the abrasives and ready-mix concrete industries. Together, these initiatives demonstrate how we are turning industrial byproducts into valuable resources while advancing our sustainability goals.

Speaker #3: We have made consistent progress in improving water efficiency across our operations through a series of focused interventions, such as adoption of zero liquid discharge systems, optimization of cooling tower operations, and reuse practices.

Speaker #3: These initiatives have helped us significantly reduce dependence on freshwater sources while improving overall process efficiency. In our aluminium business, higher recycling rates of 29% this quarter, up from 27% a year ago, along with focused optimization initiatives at our Aditya and Utkal operations, helped us reduce freshwater consumption on a year-on-year basis.

Satish Pai: In our aluminium business, higher recycling rates of 29% this quarter, up from 27% a year ago, along with focused optimization initiatives at the Aditya and Utkal operations, helped us reduce freshwater consumption on a year-on-year basis. Sequentially, water consumption was higher in this quarter, mainly due to the seasonal impacts of the summer months. In our copper business as well, specific water consumption improved year-on-year, largely due to lower freshwater requirements during the plant shutdown. These efforts reflect our continued focus on improving resource efficiency and reducing environmental footprint of our operations. Together, these efforts underscore a strong commitment to sustainable water stewardship and resource conservation across the value chains. We remain deeply committed to preserving and enhancing our biodiversity in and around our areas of operation. Biodiversity conservation remains an integral part of our sustainability agenda.

Speaker #3: Sequentially, water consumption was higher in this quarter, mainly due to the seasonal impacts of the summer months. In our copper business as well, specific water consumption improved year-on-year, largely due to lower freshwater requirements during the planned shutdown.

Speaker #3: These efforts reflect our continued focus on improving resource efficiency and reducing the environmental footprint of our operations. Together, these efforts underscore a strong commitment to sustainable water stewardship and resource conservation across the value chains.

Speaker #3: We remain deeply committed to preserving and enhancing our biodiversity in and around our areas of operation. Biodiversity conservation remains an integral part of our sustainability agenda.

Speaker #3: As of the end of Q1 FY27, cumulative tree plantation has crossed 6.3 million trees, with nearly 80,000 saplings planted during the quarter to strengthen greenbelt coverage and enhance local biodiversity around our operations.

Satish Pai: As of the end of Q1 FY27, our cumulative tree plantation has crossed 6.3 million trees, with nearly 80,000 saplings planted during the quarter to strengthen green belt coverage and enhance local biodiversity around our operations. We launched the Madhu Palanam initiative at our Bhimli bauxite mines to promote apiculture, support pollinator conservation, and further enrich local ecosystems. In addition, at our Aditya Aluminium Biodiversity Park, we have created artificial islands within a water body to support avian conservation and provide a conducive habitat for birdlife. These initiatives reflect our commitment to go beyond compliance and actively contribute to ecosystem restoration and biodiversity enhancements in the region where we operate. Renewable energy remains a key pillar of our decarbonization strategy.

Speaker #3: We launched the Madhu Palanam initiatives at our Bharat Prima Lee Bauxite Mines to promote apiculture, support pollinator conservation, and further enrich local ecosystems. In addition, at our Aditya Aluminium Biodiversity Park, we have created artificial islands within a water body to support avian conservation and provide a conducive habitat for bird life.

Speaker #3: These initiatives reflect our commitment to go beyond compliance and actively contribute to ecosystem restoration and biodiversity enhancements in the region where we operate. Renewable energy remains a key pillar of our decarbonization strategy.

Speaker #3: As of the end of Q1, we have 470 megawatts of renewable energy capacity across solar, wind, and hydro resources, along with 35 megawatts of pumped storage tie-ups under a round-the-clock renewable energy program.

Satish Pai: As of the end of Q1, we have 470 MW of renewable energy capacity across solar, wind, hydro resources, along with 35 MW of pump storage tie-ups under our round-the-clock renewable energy program. We remain on track to add another 414 MW of solar and wind capacity, as well as 90 MW of RE-RTC pump storage capacity during the year. With these additions, our renewable portfolio is expected to reach 884 MW of solar, wind, hydro capacity, along with 125 MW of RE-RTC capacity by the end of FY27. These investments underscore our commitment to reduce carbon intensity, strengthening energy security, and building a more sustainable and future-ready Hindalco. Our aluminium-specific greenhouse gas footprint stood at 19 tons of CO2 per ton of aluminium in Q1, lower than the comparable period last year.

Satish Pai: As of the end of Q1, we have 470MW of renewable energy capacity across solar, wind, hydro resources, along with 35MW of pump storage tie-ups under our round-the-clock renewable energy program. We remain on track to add another 414MW of solar and wind capacity, as well as 90MW of RE-RTC pump storage capacity during the year. With these additions, our renewable portfolio is expected to reach 884 MW of solar, wind, hydro capacity, along with 125 MW of RE-RTC capacity by the end of FY27. These investments underscore our commitment to reduce carbon intensity, strengthening energy security, and building a more sustainable and future-ready Hindalco. Our aluminium-specific greenhouse gas footprint stood at 19 tons of CO2 per ton of aluminium in Q1, lower than the comparable period last year.

Speaker #3: We remain on track to add another 414 megawatts of solar and wind capacity, as well as 90 megawatts of RERTC pumped storage capacity during the year.

Speaker #3: With these additions, our renewable portfolio is expected to reach 884 megawatts of solar, wind, and hydro capacity, along with 125 megawatts of RERTC capacity, by the end of FY27.

Speaker #3: These investments underscore our commitment to reducing carbon intensity, strengthening energy security, and building a more sustainable and future-ready Hindalco. Our aluminium-specific greenhouse gas footprint stood at 19 tons of CO2 per ton of aluminium in Q1, lower than the comparable period last year.

Speaker #3: What is encouraging is this is not a one-time improvement, but part of a sustained, structural reduction in our emission intensity. This reflects the progress we are making through our decarbonization initiatives, greater use of renewable energy, improved recycling, and ongoing operational efficiency.

Satish Pai: What is encouraging is this is not a one-time improvement, but a part of a sustained structural reduction in our emission intensity. This reflects the progress we are making through our decarbonization initiatives, greater use of renewable energy, improved recycling, and ongoing operational efficiency. As we move forward, we remain focused on building a globally competitive low-carbon aluminum business that meets the evolving expectations of our customers while creating long-term sustainable value. Let me now give you a glimpse of the current broader economic environment on slide 11. IMF projects global growth at 3% in 2026, moderating from 3.5% during 2025. A significant drag is arising from the Middle East and Central Asia region, which is expected to witness slowing growth down to 0.7% in 2026 from 3.7% a year ago due to the direct disruptions associated with the conflict.

Speaker #3: As we move forward, we remain focused on building a globally competitive, low-carbon aluminium business that meets the evolving expectations of our customers while creating long-term, sustainable value.

Speaker #3: Let me now give you a glimpse of the current broader economic environment on slide 11. The IMF projects global growth at 3% in 2026, moderating from 3.5% during 2025.

Speaker #3: A significant drag is arising from the Middle East and Central Asia region, which is expected to witness slowing growth down to 0.7% in 2026, from 3.7% a year ago, due to the direct disruptions associated with the conflict.

Speaker #3: While the war has created a negative supply shock through higher energy and commodity prices, its impact has been partially offset by strong technology-led investments and demand.

Satish Pai: While the war has created a negative supply shock through higher energy and commodity prices, its impact has been partially offset by strong technology-led investments and demand. The US economy is projected to grow by 2.3% in 2026 versus 2.1% in 2025, supported by favorable financial conditions, fiscal support, technology investments, and its net energy exporter status. China is expected to slow from 5% to 4.6% as higher energy prices, persistent uncertainty, and structural headwinds weigh on activity. Global growth remains vulnerable to renewed geopolitical escalation, commodity price volatility, tighter financial conditions, trade fragmentation, and a possible correction in the technology-related expectations. Global inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026, reflecting higher energy, food, and fertilizer prices, and signaling a temporary pause in the global disinflation process. Indian economy continues to navigate this challenging global environment.

Speaker #3: The US economy is projected to grow by 2.3% in 2026, versus 2.1% in 2025, supported by favorable financial conditions, fiscal support, technology investments, and its net energy exporter status.

Speaker #3: China is expected to slow from 5% to 4.6% as higher energy prices, persistent uncertainty, and structural headwinds weigh on activity. Global growth remains vulnerable to renewed geopolitical escalation, commodity price volatility, tighter financial conditions, trade fragmentation, and a possible correction in technology-related expectations.

Speaker #3: Global inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026, reflecting higher energy, food, and fertilizer prices, and signaling a temporary pause in the global disinflation process.

Speaker #3: The Indian economy continues to navigate this challenging global environment. The RBI projects GDP growth in FY27 at 6.7%, against 7.7% in 2025. The performance of high-frequency indicators suggests that growth momentum remains buoyant.

Satish Pai: RBI projects GDP growth in FY27 at 6.7%, against 7.7% in 2025. The performance of high-frequency indicators suggests that growth momentum remains buoyant. Industry activity continues to hold, driven by strong progress in manufacturing. Sustained momentum in the service sector continues to support economic activity, while agriculture remains on a stable footing. Domestic demand conditions remain healthy, with both rural and urban consumption showing steady growth. Investments remain stable, led by government CapEx. However, downside risks persist, particularly from geopolitical uncertainties, volatility in global financial markets, external headwinds, and weather-related disruptions. Inflation is expected to rise to 5% in FY27 from 2.1% in FY26, with upside risk emerging from global commodity price shocks, uncertainty around the monsoon, and El Niño conditions. Reflecting this balance of opportunities and challenges, the RBI has retained a neutral policy stance, allowing it the flexibility to support both sustainable growth and price stability.

Speaker #3: Industry activity continues to hold, driven by strong progress in manufacturing. Sustained momentum in the service sector continues to support economic activity, while agriculture remains on a stable footing.

Speaker #3: Domestic demand conditions remain healthy, with both rural and urban consumption showing steady growth. Investments remain stable, led by government capex. However, downside risks persist, particularly from geopolitical uncertainties, volatility in global financial markets, external headwinds, and weather-related disruptions.

Speaker #3: Inflation is expected to rise to 5% in FY27, from 2.1% in FY26. With upside risk emerging from global commodity price shocks, and uncertainty around the monsoon and El Niño conditions, reflecting this balance of opportunities and challenges, the RBI has retained a neutral policy stance, allowing it the flexibility to support both sustainable growth and price stability.

Speaker #3: Moving on to the industry outlook on slides 12 to 14. On slide 12, from a pricing perspective, the quarter was marked by significant volatility.

Satish Pai: Moving on to the industry outlook on slides 12 to 14. On slide 12, from a pricing perspective, the quarter was marked by significant volatility. Even before the Middle East conflict escalated, aluminum prices had strengthened to around INR 3,150 per ton, largely due to the closure of the Mozal smelter. Heightened concerns over potential supply disruptions then drove prices sharply higher, peaking at nearly INR 3,850 per ton before moderating down to INR 3,200 following the ceasefire. Looking ahead, we remain constructive on aluminum. The market is expected to have a deficit of 1 million tons in calendar year 2026, compared to pre-conflict expectations of about 0.3 million tons. While demand remains relatively subdued, supply-side constraints continue to support market balances and prices.

Speaker #3: Even before the Middle East conflict escalated, aluminium prices had strengthened to around $3,150 per ton, largely due to the closure of the Mosal smelter.

Speaker #3: Heightened concerns over potential supply disruptions then drove prices sharply higher, peaking at nearly $3,850 per ton before moderating down to $3,200 following the ceasefire.

Speaker #3: Looking ahead, we remain constructive on aluminium. The market is expected to have a deficit of 1 million tons in calendar year 2026, compared to pre-conflict expectations of about 0.3 million tons.

Speaker #3: While demand remains relatively subdued, supply-side constraints continue to support market balances and prices. That said, higher prices are likely to incentivize a supply response, including smelter restarts in Europe and West Asia, as well as faster ramp-ups in Indonesia and Southeast Asia, which should help rebalance the market over the medium term.

Satish Pai: That said, higher prices are likely to incentivize a supply response, including smelter restarts in Europe and West Asia and faster ramp-ups in Indonesia and Southeast Asia, which should help rebalance the market over the medium term. Looking at the global aluminum market in Q1 of calendar year 2026, Chinese aluminum production grew about 3% year-on-year to nearly 11 million tons, supported by capacity additions in regions such as Yunnan and Inner Mongolia. This was partially offset by capacity rationalization in Shandong. Outside China, production declined by around 8% to 7 million tons, largely due to disruptions related to the Middle East conflict and the closure of Mozal, although higher outputs from Indonesia and Europe provided some support. As a result, global aluminum production stood at 18 million tons, down 1% year-on-year.

Speaker #3: Looking at the global aluminium market in Q1 of calendar year 2026, Chinese aluminium production grew about 3% year-on-year to nearly 11 million tons, supported by capacity additions in regions such as Yunnan and Inner Mongolia.

Speaker #3: This was partially offset by capacity rationalization in Shandong. Outside China, production declined by around 8% to 7 million tons, largely due to disruptions related to the Middle East conflict and the closure of Mosal, although higher outputs from Indonesia and Europe provided some support.

Speaker #3: As a result, global aluminium production stood at 18 million tons, down 1% year-on-year. On the demand side, China continues to see healthy growth, with consumption up 2% to around 12 million tons, driven by strong demand from new energy vehicles and robust exports of semi-fabricated and finished products.

Satish Pai: On the demand side, China continues to see healthy growth, with consumption up 2% to around 12 million tons, driven by strong demand from new energy vehicles and robust exports of semi-fabricated and finished products. However, the property sector remains weak. Outside China, demand declined by around 2% as softer conditions in Europe, North America, and Middle East more than offset growth in India. Overall, global aluminum consumption increased 1% year-on-year to approximately 19 million tons. While demand is continuing to outpace supply, the global aluminum market remains in deficit by roughly 1 million tons this quarter, providing continued support to market fundamentals. Turning to India, demand continues to be relatively resilient and remains ahead of most global markets. We estimate aluminum demand in Q1 of FY2027 at around 1.5 million tons, representing growth of approximately 3% year-on-year.

Speaker #3: However, the property sector remains weak. Outside China, demand declined by around 2%, with softer conditions in Europe, North America, and the Middle East more than offsetting growth in India.

Speaker #3: Overall, global aluminium consumption increased 1% year-on-year to approximately 19 million tons. While demand continues to outpace supply, the global aluminium market remains in deficit by roughly 1 million tons this quarter, providing continued support to market fundamentals.

Speaker #3: Turning to India, demand continues to be relatively resilient and remains ahead of most global markets. We estimate aluminium demand in Q1 of FY27 at around 1.5 million tons, representing growth of approximately 3% year-on-year.

Speaker #3: The key growth drivers were automotive demand, supported by GST 2.0-related benefits, and continued vehicle production growth. Along with stable demand from the packaging, industrial machinery, and consumer durable segments, the only area that saw some moderation was the electrical segment, where certain contractor-led projects were deferred due to price volatility during the quarter.

Satish Pai: The key growth drivers were automotive demand, supported by GST 2.0 related benefits and continued vehicle production growth, along with stable demand from the packaging, industrial machinery, and consumer durable segments. The only area that saw some moderation was the electrical segment, where certain contractor-led projects were deferred due to price volatility during the quarter. Overall, India continues to outgrow global aluminum demand and remains one of the most attractive long-term growth markets for the industry. Within domestic products, flat roll products performed particularly well, with demand growing by more than 10% year-on-year, driven primarily by strong demand from packaging and consumer durables. Turning to the Indian copper industry on slide 14. In India, refined copper demand remained somewhat subdued during the quarter, driven by inventory optimization by customers and a more cautious purchasing approach amid uncertainty arising from the Middle East conflict.

Speaker #3: Overall, India continues to outgrow global aluminium demand and remains one of the most attractive long-term growth markets for the industry. Within domestic products, flat-rolled products performed particularly well, with demand growing by more than 10% year-on-year, driven primarily by strong demand from packaging and consumer durables.

Speaker #3: Turning to the Indian copper industry on slide 14. In India, refined copper demand remained somewhat subdued during the quarter, driven by inventory optimization by customers and a more cautious purchasing approach amid uncertainties arising from the West Asia conflict.

Speaker #3: Total demand, including domestic supplies and scrap, in Q1 FY27 stood at 359 kt, compared to 396 kt in the same period last year, reflecting a 9% year-on-year decline.

Satish Pai: Total demand, including domestic supplies and scrap in Q1 of FY2027, stood at 359 KT compared to 396 KT in the same period last year, reflecting a 9% year-on-year decline. In Q2 of calendar year 2026, the global copper production grew 2.6% year-on-year to 7.2 million tons, while consumption increased more modestly to 7.5 million tons, resulting in a net global deficit of around 0.3 million tons for the quarter. On the copper concentrate side, the quarter remained quite challenging. Availability of concentrate was tight across the industry, and treatments and refining charges stayed at historically low levels, and at times even negative levels at the range of -$0.26 to -$0.30 per pound. This reflects a broader trend where global smelting capacity continues to grow faster than the availability of mine supply. While stronger by-product credits provided some support to smelter economics, concentrate supply remains a key constraint.

Speaker #3: In Q2 of calendar year 2026, global copper production grew 2.6% year-on-year to 7.2 million tons, while consumption increased more modestly to 7.5 million tons, resulting in a net global deficit of around 0.3 million tons for the quarter.

Speaker #3: On the copper concentrate side, the quarter remained quite challenging. Availability of concentrate was tight across the industry, and treatment and refining charges stayed at historically low levels—and at times even negative— in the range of minus 26 to minus 30 cents per pound.

Speaker #3: This reflects a broader trend where global smelting capacity continues to grow faster than the availability of mine supply. While stronger by-product credits provided some support to smelter economics, concentrate supply remains the key constraint.

Speaker #3: Looking ahead, we expect these tight market conditions to persist, with concentrate availability and TCRCs likely to remain under pressure throughout the rest of this year.

Satish Pai: Looking ahead, we expect these tight market conditions to persist with concentrate availability and TCRCs likely to remain under pressure throughout the rest of this year. Coming to slide 16, our consolidated business segment, EBITDA, was up 58% year-on-year at INR 13,481 crores this quarter. The consolidated profit after tax was up 75% on a year-on-year basis at INR 7,013 crores this quarter. At Hindalco India business, our business segment, EBITDA, was up 73% year-on-year at INR 8,606 crores this quarter, whereas our quarterly profit after tax was INR 5,301 crores, up 86% on a year-on-year basis this quarter. Before we get into the details of our quarterly segment-wise performance, I would like to highlight two structural tailwinds that we believe will provide incremental support to our profitability and long-term growth trajectory.

Speaker #3: Continuing, coming to slide 16, our consolidated business segment EBITDA was up 58% year-on-year at ₹13,481 crore this quarter. The consolidated profit after tax was up 75% on a year-on-year basis at ₹7,013 crore this quarter.

Speaker #3: At Hindalco India Business, our business segment EBITDA was up 73% year-on-year at ₹8,606 crore this quarter, whereas our quarterly profit after tax was ₹5,301 crore, up 86% on a year-on-year basis this quarter.

Speaker #3: Before we get into the details of our quarterly, segment-wise performance, I would like to highlight two structural tailwinds that we believe will provide incremental support to our profitability and long-term growth trajectory.

Speaker #3: In India, our move to the new tax regime is a structural benefit that permanently lowers our effective tax rate to 26%, creating an uplift to profitability ratios of EPS and return on equity.

Satish Pai: In India, our move to the new tax regime is a structural benefit that permanently lowers our effective tax rate to 26%, creating an uplift to profitability ratios of EPS and return on equity. Novelis' dollar-denominated earnings get a significant uplift in consolidated financials in an environment where the rupee depreciates against the US dollar. Together, these advantages improve the quality, predictability, and growth potentials of our earnings, supporting long-term shareholder value creation. Coming to our business-wide performance this quarter on slide 17. The India upstream aluminum shipments were up 3% year-on-year, and revenues were up 44% year-on-year. Our quarterly EBITDA was a record INR 7,390 crores, up 81% year-on-year, backed by favorable macros and our strong performance across the value chain. This delivered an all-time high EBITDA of $2,331 per tonne this quarter.

Speaker #3: Secondly, Novelis's dollar-denominated earnings get a significant uplift in consolidated finance in an environment where the rupee depreciates against the US dollar. Together, these advantages improve the quality, predictability, and growth potential of our earnings.

Speaker #3: Supporting long-term shareholder value creation. Coming to our business-wise performance this quarter, on slide 17, the India upstream aluminum shipments were up 3% year-on-year, and revenues were up 44% year-on-year.

Speaker #3: Our quarterly EBITDA was a record ₹7,390 crore, up 81% year-on-year, backed by favorable macros and our strong performance across the value chain. This delivered an all-time high EBITDA of $2,331 per ton this quarter.

Speaker #3: EBITDA margins were at a record 55% and continue to be among the best in the global industry. Our hedging positions in aluminium for the rest of FY27 stand at around 29% on the commodity at $3,004 per ton, and 18% in the currency at ₹91.63 per dollar.

Satish Pai: EBITDA margins were at a record 55% and continue to be amongst the best in the global industry. Our hedging positions in aluminum for the rest of FY27 stand at around 29% on the commodity at INR 3,004 per tonne and 18% in the currency at INR 91.63 per dollar. Our Indian downstream aluminum business continued to deliver a strong performance, where quarterly shipments were up 3% year-on-year at 104 KT. Aluminum downstream delivered a quarterly EBITDA of INR 298 crores, up by 30% year-on-year this quarter versus INR 229 crores in the prior period. This was driven by higher volumes, product mix, and premiumization. The resulted EBITDA per tonne stood a little more than INR 300 at $303 a tonne this quarter. On India's copper business performance this quarter, our overall metal shipments were at 105 KT, down 16% year-on-year due to the planned maintenance shutdown.

Speaker #3: Our Indian downstream aluminium business continues to deliver a strong performance, with quarterly shipments up 3% year-on-year at 104 kt. Aluminium downstream delivered a quarterly EBITDA of ₹298 crore, up 30% year-on-year this quarter versus ₹229 crore in the prior period.

Speaker #3: This was driven by higher volumes, product mix, and premiumization. The resulting EBITDA per ton stood a little more than $300, at $303 a ton this quarter.

Speaker #3: On India's copper business performance, this quarter our overall metal shipments were at 105 kt, down 16% year-on-year due to the planned maintenance shutdown. The CCR volumes were at 96 kt, down 8% year-on-year due to tighter market conditions.

Satish Pai: The CCR volumes were at 96 KT, down 8% year-on-year due to tighter market conditions. Our quarterly copper EBITDA stood at a record INR 918 crores, up 36% year-on-year on account of better realizations in byproducts and operational efficiencies. Our planned maintenance shutdown during the quarter impacted anode production through the concentrate route. Excluding the shutdown effect, our EBITDA per tonne for this quarter would have been around $1,000, reflecting the underlying strength of the business. Novelis recorded shipments of 916 KT, reflecting a decline of 5% year-on-year over 963 KT shipments in the same period last year. Adjusted EBITDA for the quarter stood at $516 million or $563 per tonne, reflecting a 24% and 30% increase respectively year-on-year. This includes a +$18 million net positive impact from the Oswego fires and is inclusive of $47 million insurance proceeds received during the quarter.

Speaker #3: Our quarterly copper EBITDA stood at a record ₹918 crores, up 36% year-on-year on account of better realizations in by-products and operational efficiencies. Our planned maintenance shutdown during the quarter impacted anode production through the concentrate route.

Speaker #3: Excluding this shutdown effect, our EBITDA per ton this quarter would have been around 1,000 dollars, reflecting the underlying strength of the business. Novelis recorded shipments of 916 kt, reflecting a decline of 5% year-on-year over 9 5% year-on-year over 963 kt shipments in the same period last year.

Speaker #3: Adjusted EBITDA for the quarter stood at $516 million, or $563 per ton, reflecting a 24% and 30% increase respectively year-on-year. This includes an $18 million net positive impact from the Oswego fires and is inclusive of $47 million insurance proceeds received during the quarter.

Speaker #3: With another quarter of solid execution behind us, the run-rate cost savings are now at $225 million, as we accelerate all cost efficiency initiatives.

Satish Pai: With another quarter of solid execution behind us, that run rate cost savings are now at INR 225 million as we accelerate all cost efficiency initiatives. Looking ahead, we remain committed to our three-year goal of permanently reducing our cost structure by INR 350 to 400 million by FY2028 exit. Additionally, scrap prices continue to move in a positive direction, supporting margin improvement. Turning to slide 19. We continue to maintain a strong and resilient balance sheet. As of June 2026, our consolidated net debt to EBITDA stood at 1.95x below our stated threshold of two times. Despite the temporary impact of the Oswego fire incident, our businesses continue to generate healthy cash flows, demonstrating the strength and resilience of our portfolio. We remain disciplined in our capital allocation approach and committed to maintain net leverage at around two times on a consolidated basis.

Speaker #3: Looking ahead, we remain committed to our three-year goal of permanently reducing our cost structure by $350 to $400 million by FY28 exit. Additionally, scrap prices continue to move in a positive direction, supporting margin improvement.

Speaker #3: Turning to slide 19, we continue to maintain a strong and resilient balance sheet. As of June 2026, our consolidated net debt-to-EBITDA stood at 1.95x, below our stated threshold of 2x.

Speaker #3: Despite the temporary impacts of the Oswego fire incident, our businesses continue to generate healthy cash flows, demonstrating the strength and resilience of our portfolio.

Speaker #3: We remain disciplined in our capital allocation approach and are committed to maintaining net leverage at around two times on a consolidated basis. At the same time, we continue to strike the right balance between investing in high-growth opportunities that enhance our long-term value and delivering attractive returns to our shareholders.

Satish Pai: At the same time, we continue to strike the right balance between investing in high growth opportunities that enhance our long-term value and deliver attractive returns to our shareholders. Details of the operational and financial performance in each of our business segments this quarter compared to the corresponding period of last year, as well as the previous quarters, are covered in further slides and annexures to this presentation. Let me conclude today's presentation with some key takeaways. At Novelis, our Q1 performance once again demonstrated the strength and resilience of the underlying business despite the temporary impact of the Oswego fire last year. We have successfully restarted the mill in June, and it is now ramping up steadily towards normal operating levels.

Speaker #3: Details of the operational and financial performance in each of our business segments this quarter, compared to the corresponding period of last year as well as the previous quarters, are covered in further slides and annexures to this presentation.

Speaker #3: Now, let me conclude today's presentation with some key takeaways. At Novelis, our first quarter performance once again demonstrated the strength and resilience of the underlying business, despite the temporary impact of the Oswego fire last year.

Speaker #3: We have successfully restarted the mill in June, and it is now ramping up steadily towards normal operating levels. We view the impact of the outages largely as a timing issue rather than a structural one, with a significant portion of the current year's headwinds expected to be recovered over the course of the next fiscal year.

Satish Pai: We view the impact of the outage largely as a timing issue rather than a structural one, with a significant portion of the current year's headwinds expected to be recovered over the course of the next fiscal year. Importantly, our long-term EBITDA per tonne guidance of INR 600 remains unchanged. This confidence is supported by the accelerated execution of our INR 350 to 400 million structural cost reduction program, which is delivering sustainable improvements in productivity, efficiency, and margins across the businesses. At the same time, we continue to make significant progress on our growth agenda. The 600 KT Bay Minette greenfield rolling and recycling facility, which is on track for completion this year, represents a transformational milestone for Novelis. With the initial commissioning of key assets already underway, Bay Minette will further strengthen our operating footprint, expand our recycling capability, and position Novelis for its next phase of long-term profitable growth.

Speaker #3: Importantly, our long-term EBITDA per ton guidance of $600 remains unchanged. This confidence is supported by the accelerated execution of our $350 to $400 million structural cost reduction program, which is delivering sustainable improvements in productivity, efficiency, and margins across the businesses.

Speaker #3: At the same time, we continue to make significant progress on our growth agenda. The 600 kt Bay Minette greenfield rolling and recycling facility, which is on track for completion this year, represents a transformational milestone for Novelis.

Speaker #3: With the initial commissioning of key assets already underway, Bayonet will further strengthen our operating footprint, expand our recycling capabilities, and position Novelis for its next phase of long-term profitable growth.

Speaker #3: Coming to our India business, we have once again delivered an exceptional quarter, achieving record and industry-leading EBITDA per ton and margins across both our upstream and downstream aluminium businesses, alongside a record EBITDA performance in copper.

Satish Pai: Coming to our India business, we have once again delivered an exceptional quarter, achieving record and industry-leading EBITDA per tonne and margins across both our upstream and downstream aluminum businesses, alongside a record EBITDA performance in copper. This reflects the strength of our integrated business model, relentless focus on operational excellence, disciplined cost management, and consistent execution across market cycles. On the growth front, all our key upstream expansion projects, including the Aditya alumina refinery and aluminum smelter expansions, are progressing well and remain on track. These projects are integral to our strategy of doubling upstream capacities while strengthening our integration and cost leadership. We are also making steady progress on our captive coal mine development projects, including Chakla, Banda, and Meenakshi.

Speaker #3: This reflects the strength of our integrated business model, relentless focus on operational excellence, disciplined cost management, and consistent execution across market cycles. On the growth front, all our key upstream expansion projects, including the Odyssey alumina refinery and aluminium smelter expansions, are progressing well and remain on track.

Speaker #3: These projects are integral to our strategy of doubling upstream capacities while strengthening our integration and cost leadership. We are also making steady progress on our captive coal mine development projects, including Chakla, Banda, and Minaski.

Speaker #3: As these mines become operational, they will strengthen our resource security, lower production costs, support margin expansions, and further enhance the earnings profile of our upstream business.

Satish Pai: As these mines become operational, they will strengthen our resource security, lower production costs, and support margin expansion, and further enhance the earnings profile of our upstream business. On the downstream side, we continue to make good progress on our growth projects. The Aditya FRP plant is ramping up well and is already making a meaningful contribution to overall production. We also commissioned the Aditya battery foil and the Talcher AC fin facilities last quarter, and both projects are progressing well with customer qualification process currently underway. In specialty alumina, our precipitated hydrate facility is advancing through customer approval stages, bringing us closer to commercialization. In copper, the business continues to demonstrate resilience and strong execution. Our copper smelter expansion, e-waste recycling projects, and other sustainability-led initiatives are progressing as planned. In addition, the inner grooved tubes project will further strengthen our downstream portfolio and enhance our value-added product capabilities.

Speaker #3: On the downstream side, we continue to make good progress on our growth projects. The Aditya FRP plant is ramping up well and is already making a meaningful contribution to overall production.

Speaker #3: We also commissioned our Aditya battery foil and the Taloja AC fin facilities last quarter, and both projects are progressing well. The customer qualification process is currently underway.

Speaker #3: In specialty alumina, our precipitated hydrate facility is advancing through customer approval stages, bringing us closer to commercialization. In copper, the business continues to demonstrate resilience and strong execution.

Speaker #3: Our copper smelter expansion, e-waste recycling projects, and other sustainability-led initiatives are progressing as planned. In addition, the Inner Group Tubes project will further strengthen our downstream portfolio and enhance our value-added productivities.

Speaker #3: Looking ahead, our strategic priorities are clear in India. We are accelerating our upstream expansion in both aluminium and copper, while building a significantly stronger downstream portfolio, with the ambition of delivering a fourfold increase in downstream EBITDA by FY30.

Satish Pai: Looking ahead, our strategic priorities are clear in India. We are accelerating our upstream expansion in both aluminum and copper while building a significantly strong downstream portfolio with the ambition of delivering a fourfold increase in downstream EBITDA by FY30. At Novelis, we remain focused on executing the mid to long-term 3x30 strategy, which is aimed at driving sustainable growth, higher profitability, and stronger returns. Overall, Hindalco is exceptionally well-positioned for the future, backed by our integrated business model, strong resource base, disciplined capital allocation, and growth investments across the value chain. We remain committed to our purpose of engineering better futures while creating long-term sustainable value for our stakeholders. Thank you very much for your attention, and the forum is now open for questions.

Speaker #3: At Novelis, we remain focused on executing the mid- to long-term 3x30 strategy, which is aimed at driving sustainable growth, higher profitability, and stronger returns.

Speaker #3: Overall, Hindalco is exceptionally well positioned for the future, backed by our integrated business model, strong resource base, disciplined capital allocation, and growth investments across the value chain.

Speaker #3: We remain committed to our purpose of engineering better futures while creating long-term, sustainable value for our stakeholders. Thank you very much for your attention, and the forum is now open for questions.

Speaker #1: Thank you. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on a touch-tone telephone.

Operator: Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Satyadeep Jain with Ambit Capital. Please go ahead.

Speaker #1: If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question.

Speaker #1: Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Satyadeep Jain with Amrit Capital.

Speaker #1: Please go ahead.

Speaker #2: Hi, thank you. Mr. Pai, I just wanted to check if you can clarify – in the Novelis 10-Q, it is mentioned that Novelis will pay up to 0.25% of revenue as royalty to an entity. Not—

Satyadeep Jain: Hi. Thank you. Mr. Pai, just wanted to check, if you can clarify. In the Novelis 10-Q, it is mentioned that Novelis will pay up to 0.25% of revenue as royalty to an entity. Not sure if it's a promoter entity. Can you clarify what that is, and why is that royalty being paid from Novelis?

Speaker #2: If it's a promoter entity, can you clarify what that is, and why is that royalty being paid from Novelis?

Speaker #3: So, I think that as far as the brand royalty is concerned, let me just give you an update. I think the ownership of the Aditya Birla brand has remained with the Birla Group Holdings Private Limited.

Satish Pai: I think that as far as the brand royalty is concerned, let me just give you an update. I think the ownership of the Aditya Birla brand has remained with the Birla Group Holdings Private Limited. In the past, this BGH has not charged any royalty for the use of ABG marks all these years, making it one of the exceptions among large Indian conglomerates. What is happening is that this brand royalty, this framework, these marks a transition from family-driven stewardship to structured governance. I think, investing in the brand, keeping it better for the future. I think Novelis declared it in its 10-Q. Hindalco comes under SEBI regulation. Under SEBI LODR, all our related party transactions will be disclosed biannually through exchange filings due in October.

Speaker #3: And in the past, this VGH has not charged any royalty for the use of ABG marks all these years, making it one of the exceptions among large Indian conglomerates.

Speaker #3: So what is happening is that this brand royalty, this framework, these marks are transitioned from family-driven stewardship to structured governance. So, I think investing in the brand keeps it better for the future.

Speaker #3: So I think Novelis declared it in its 10-Q. Hindalco comes under SEBI regulation, so under SEBI LODR, all our related party transactions will be disclosed biannually through exchange filings due in October.

Speaker #3: So, I think even Hindalco will be paying that same type of royalty to Bella Group Holdings Private Limited.

Satish Pai: I think even Hindalco will be paying that same type of royalty to Birla Group Holdings Private Limited.

Speaker #2: Good point. Hindalco would also be 0.25%.

Satyadeep Jain: For Hindalco would also be 0.25%?

Speaker #3: Yes, and it's capped at ₹225 crore. I think it's important to note for us that this royalty amount is below what we consider our materiality threshold.

Satish Pai: Yes, it is capped at 225 crores. I think it is important to note for us, this royalty amount is below what we say is our materiality threshold.

Speaker #2: That ₹225 crore is for six months of this year, right? But otherwise, on a same basis.

Satyadeep Jain: That 225 crore is for six months of this year, right? Otherwise on a same basis.

Speaker #3: No, for this year. For the year, certainly.

Satish Pai: No. For the year, Satyadeep.

Speaker #2: Or for this year, because it's starting from September, but otherwise for next year, should it be that ₹225 crore cap?

Satyadeep Jain: For this year, because it's starting from September, otherwise for next year should be, would that 225 crore cap it?

Speaker #3: It's for 12 months, capped at ₹225 crore.

Satish Pai: No. It's for 12 months capped at 225 crores.

Speaker #2: Okay. For Novelis, you're saying, right?

Satyadeep Jain: Okay. For Novelis, you're saying, right?

Speaker #3: And Hindalco will be exactly the same.

Satish Pai: Hindalco will be exactly the same.

Speaker #2: Okay. So this is going to apply—I'm sure you can't talk about other entities—but it's going to apply generally to all the other entities also.

Satyadeep Jain: Okay. This is going to apply, I'm sure you can't talk about other entities, it's going to apply generally to all the other entities also.

Satish Pai: I cannot comment.

Speaker #3: I cannot.

Speaker #2: Yeah. So the other one was this—I know Novelis again—we thought we'd get more clarity on it. There have been many investor questions on the $70 million of tariff impact at Novelis.

Satyadeep Jain: Yeah. The other one was, this I know Novelis again, we thought we'll get more clarity on. There have been many investor questions on the $70 million of tariff impact at Novelis. I know the team tried to clarify that on the call. If we exclude that $70 million, it looks like EBITDA per ton would have been more than $600 per ton for Novelis. Just trying to understand why did the tariff impact increase so significantly from $24 million last quarter to $70 million, and why is that not excluded from EBITDA to report an adjusted EBITDA?

Speaker #2: I know the team tried to clarify that on the call, but is that if we exclude that $70 million, it looks like EBITDA per ton would have been more than $600 per ton for Novelis.

Speaker #2: Just trying to understand why the tariff impact increased so significantly from $24 million last quarter to $70 million, and why that is not excluded from EBITDA to report an adjusted EBITDA?

Speaker #3: Steve, there you want to.

Satish Pai: Steve, there you want to-

Steve Fisher: Okay. Yeah, Satyadeep, no, we cannot take it out of adjusted EBITDA. Number one. Number two, Satyadeep, I can basically just amplify what I said at the call the other day. You got to think about this as related to the fact that we are not able to produce enough yet in the US. We have to depend on more imports. As far as capacity is concerned, theoretically, if all the assets start running optimally, we will have enough onshore capacity. Given the fact that we have had to reconsider so many things post the Oswego fire, and particularly in this quarter, we have had to really keep our customers. This is related to keeping customers as much as we can fully serviced. Net net, this is an impact that will stay with us for some time.

Speaker #4: Okay. So, yeah, Satyadeep, no, we cannot take it out of adjusted EBITDA—number one. Number two, Satyadeep, I can basically just amplify what I said at the call the other day.

Speaker #4: You have to think about this as related to the fact that we are not able to produce enough yet in the U.S. We have to depend on more imports.

Speaker #4: As far as capacity is concerned, theoretically, if all the assets start running optimally, we will have enough onshore capacity. But given the fact that we have had to reconfigure so many things post-Los Riego fire, and particularly in this quarter, we have had to really keep our customers—so this is related to keeping customers as much as we can—fully serviced.

Speaker #4: So net-net, this is an impact that will stay with us for some time. Now, be careful about literally sort of adding that back and taking the EBITDA per ton at over 600.

Steve Fisher: Now, be careful about literally sort of adding that back and taking the EBITDA per ton at over $600. I would not recommend you do those kind of adjustments. There are many moving parts on a macro level, metal prices and so on. We just need to be careful. For the next couple of quarters, there will be some level of tariffs. I cannot say exactly how much. We still need to work on reconfiguring our supply chain. Be careful about just literally adding it back. All that I'm telling you is that it's not like the $70, unfortunately, will go to zero until the time we have just set all our supply chains back in order. That's really the best answer that I can provide to you.

Speaker #4: I mean, I would not recommend you do those kinds of adjustments. There are many moving parts on a macro level, metal prices, and so on.

Speaker #4: I mean, we just need to be careful. For the next couple of quarters, there will be some level of tariffs. I cannot say exactly how much.

Speaker #4: I mean, we still need to work on reconfiguring our supply chain, so be careful about just literally adding it back. All that I'm telling you is that it's not like the 70, unfortunately, will go to zero until the time we adjust and get all our supply chains back in order.

Speaker #4: So that's really the best answer that I can provide to you.

Speaker #2: So just, let's say, once Los Riego is up and running in two quarters from now—so, this $70 million, basically, when Los Riego production was impacted, some of it was being fulfilled by procuring metals from the competitors in the US.

Satyadeep Jain: Just let's say once Oswego is up and running in 2 quarters from now, this INR 70 million, basically when Oswego production was impacted, some of it was being fulfilled by procuring metal from the competitors in US. It seems like this quarter you used some of the other facilities to bring more imports into US. Is that correct? The impact was mainly to fulfill Oswego shipments in Q1. What about the other, Ulsan and all other material that you were seeing tariff impact in the previous quarters? That impact was not there at all this quarter.

Speaker #2: It seems like this quarter you used some of the other facilities to bring more imports into the US. Is that correct? And so, the impact was mainly to fulfill Los Riego shipments in one quarter.

Speaker #2: And what about the other roadside and all other material where you were seeing tariff impact in the previous quarters? That impact was not there at all this quarter.

Steve Fisher: Yeah. Let's step back. Satyadeep, we are really getting into the weeds and to explain the entire supply chain is really complicated. Let's just bring this back into why this quarter, why not so much earlier quarters. Look, as much as possible, we are trying to cut dependence on third parties and use our own system because there are benefits of quality, of reliability, of more consistency. As much as possible, we are trying to use our system, our network to bring in materials. Earlier, we had to really get a lot of third party, and that goes in the cost of the freight. Be careful. What we get from third parties goes in the cost of the freight, which is below the line. This is from our own network. We don't basically classify this tariff below the line in cost of freight, and that is the difference.

Speaker #4: I mean, this is Satyadeep. We are really getting into the weeds, and to explain the entire supply chain is really complicated. I think let's just bring this back to why this quarter, and not so much earlier quarters.

Speaker #4: Look, as much as possible, we are trying to sort of cut dependence on third parties and use our own system, because there are benefits of quality, reliability, and more consistency.

Speaker #4: So, as much as possible, we are sort of trying to use our system—our network—to bring in materials. Earlier, we had to really get a lot from third parties, and that goes into the cost of the fire.

Speaker #4: So be careful. What we get from third parties goes in the cost of the fire, which is below the line. This is from our own network.

Speaker #4: We don't basically classify this tariff below the line in cost of fire. And that is the difference. So I'm not—it's very difficult to explain the entire material flow and the supply chain.

Steve Fisher: It's very difficult to explain the entire material flow and the supply chain. I can only give you a direction and guidance to say that we'll have to live with some level of tariffs in the coming quarters. It is not like Oswego is up and everything just starts going back to normal. No, it takes time. There are materials in the pipeline. There is production that is already happening. It is not like you can time things so perfectly, right? That is why I'm saying away from giving very specific guidance, let's just take the next quarter. By that time, we will have a little more clarity and we will talk about it again. For now, I would leave it at this. All right?

Speaker #4: I can only sort of give you a direction and guidance to say that we'll have to live with some level of tariffs in the coming quarters, and it is not like Oswego is up and everything sort of just starts going back to normal.

Speaker #4: No, it takes time. It takes time. There are materials in the pipeline, and there is production that is already happening, so it is not like you can time things so perfectly, right?

Speaker #4: So that is why I'm staying away from giving very specific guidance. Let's just take the next quarter; by that time, you will have a little more clarity and we will talk about it again.

Speaker #4: So, for now, I would leave it at this. All right?

Speaker #2: Okay. Thank you so much.

Satyadeep Jain: Okay. Thank you so much.

Speaker #4: Thank you.

Steve Fisher: Thank you.

Speaker #1: Thank you. Next question comes from Vinakant with HSBC. Please go ahead.

Operator: Thank you. Next question comes from the line of Pinakin with HSBC. Please go ahead.

Speaker #5: Yeah. Thank you very much, sir. Just two quick questions. Keeping prices aside for a moment, there was an operational impact in aluminum downstream and copper.

[Analyst] (HSBC): Yeah. Thank you very much, sir. Just two quick questions. Keeping prices aside for a moment, there was an operational impact in aluminum downstream and copper. Should we expect these volumes to recover from Q2 onwards?

Pinakin Parekh: Yeah. Thank you very much, sir. Just two quick questions. Keeping prices aside for a moment, there was an operational impact in aluminum downstream and copper. Should we expect these volumes to recover from Q2 onwards?

Speaker #5: Should we expect these volumes to recover from Q2 onwards?

Speaker #3: Yeah, I think the volumes in Q2, both for copper and downstream aluminum, will be higher. I mean, as I said in my prepared remarks, the electrical sector was a little bit weak.

Satish Pai: Yeah, I think the volumes in Q2, both for copper and downstream aluminum, will be higher. As I said in my prepared remarks, the electrical sector was a little bit weak. In copper, we had a planned shutdown of a smelter. I think for Pinakin, the volumes in Q2, both for aluminum downstream and copper, will be higher.

Speaker #3: In copper, we had a planned shutdown of a smelter. So I think for Vinakant, the volumes downstream in copper will be higher.

Speaker #5: Got it. And second question is, at the console level, we still see an exceptional hit of roughly ₹2,300 crore in this quarter. There was no exceptional one-time impact in Novelis.

[Analyst] (HSBC): Got it. Second question is, at the consolidated level, we still see an exceptional hit of roughly INR 2,300 crore in this quarter. There was no exceptional one-time impact in Novelis. Given Oswego has restarted, should we continue to see exceptional losses from Q2 in the consolidated P&L, how should we look at this?

Pinakin Parekh: Got it. Second question is, at the consolidated level, we still see an exceptional hit of roughly INR 2,300 crore in this quarter. There was no exceptional one-time impact in Novelis. Given Oswego has restarted, should we continue to see exceptional losses from Q2 in the consolidated P&L, how should we look at this?

Speaker #5: So, given Oswego has restarted, should we continue to see exceptional losses from the second quarter in the consolidated P&L? How should we look at this?

Speaker #3: No, Vinakant, it's a difference between US GAAP and India's. In India, we have to show it as exceptional. I think in US GAAP, it comes in.

Satish Pai: No, Pinakin, it's a difference between US GAAP and India's. In India's, we have to show it as exceptional. I think in US GAAP it comes in-

Operator 2: Unallocated

Steve Fisher: Unallocated

Speaker #5: Analytics.

Speaker #3: Analytics. So we can explain that to you offline. It's a difference between US GAAP and India's.

Satish Pai: unallocated. We can explain that to you offline. It's a difference between US GAAP and India's.

Speaker #5: So given the Oswego planting restarted, should we expect this quantum to reduce, or at the console level, will we see a similar hit?

[Analyst] (HSBC): Given the Oswego plant has restarted, should we expect this quantum to reduce, or at the consolidated level will we see a similar hit?

Pinakin Parekh: Given the Oswego plant has restarted, should we expect this quantum to reduce, or at the consolidated level will we see a similar hit?

Speaker #3: No, no, no. As the Oswego plant restarts, then it should go away.

Satish Pai: No, no. As the Oswego plant restarts, it should go away.

Speaker #5: It should go away. Got it.

[Analyst] (HSBC): It should go away. Got it.

Pinakin Parekh: It should go away. Got it.

Speaker #3: And the insurance recoveries will start to come in then.

Satish Pai: The insurance recoveries will start to come in then.

Speaker #5: Okay. Okay. Okay. And the last question is just on the net debt guidance. For year-end, we heard from the Novelis call about their expectations of leverage coming down below 4x.

[Analyst] (HSBC): Okay. My last question is just on the net debt guidance for the year, as we heard from the Novelis call of their expectations of leverage to come down below 4x. At the consolidated Hindalco level, should we expect the net debt to be steady at these levels as of March and come down because the underlying cash flows are very, very strong.

Pinakin Parekh: Okay. My last question is just on the net debt guidance for the year, as we heard from the Novelis call of their expectations of leverage to come down below 4x. At the consolidated Hindalco level, should we expect the net debt to be steady at these levels as of March and come down because the underlying cash flows are very, very strong.

Speaker #5: At the console, Dalco level, should we expect the net debt to be steady at these levels as of March and come down, because the underlying cash flows are very, very strong?

Speaker #3: Yeah, I think on the India side, Vinakant, this is a high capex year for us, so I don't expect our net debt to EBITDA to materially change across the coming quarters.

Satish Pai: Yeah, I think on the India side, Pinakin, this is a high CapEx year for us, so I don't expect our net debt to EBITDA to materially change across the coming quarters. I think that if Novelis net debt to EBITDA starts to come down in Q4, then the consolidated should go down.

Speaker #3: So I think that if Novelis net debt to EBITDA starts to come down in Q4, then the console should go down.

Speaker #5: Got it. Thank you very much.

Operator 2: Got it. Thank you very much.

Operator: Got it. Thank you very much.

Speaker #3: Yeah, thank you.

Satish Pai: Yeah, thank you.

Speaker #1: Thank you. The next question comes from the line of Sumangal Nipatya with Kotak Securities. Please go ahead.

Operator: Thank you. The next question comes from the line of Sumangal Nevatia with Kotak Securities. Please go ahead.

Speaker #5: Yeah, good evening. Thanks for the chance. So, first question on the downstream aluminum business: the $300 margin is a multi-quarter high. Is there something unsustainable there, or, with the ramp-up now of the FRP plant, should we expect to sustainably see these sorts of levels in the future as well?

Sumangal Nevatia: Yeah, good evening. Thanks for the chance. First question on the downstream aluminum business, the $300 margin is multi-quarter high. Is it something unsustainable there or with the ramp-up now of the FRP plant, should we sustainably see these sort of levels in future as well?

Speaker #3: So, I think we have been sort of targeting more around the 250. There is also, with the metal premiums and all going up, we are on up.

Satish Pai: I think we have been sort of targeting more around the $250. There is also with the metal premiums and all going off, we have gone up. We have been able to hold our pricing in the downstream. I think we will have to because the downstream pricing net to the customer is metal plus MJP plus the conversion premium. High MJP has helped us get those margins on the downstream also up. I would say more around $250 is a more sustainable number.

Speaker #3: We have been able to hold our pricing in the downstream. So, I think we will have to, because the downstream pricing net to the customer is metal plus NJP plus the conversion premium.

Speaker #3: So, high NJP has helped us get those margins on the downstream also up. So, I would say more around 250 is a more sustainable number.

Speaker #5: Understood. Just a couple more clarifications on the royalty: for how long is it fixed? I mean, will it come up for review every now and then in terms of percentage of sales?

Sumangal Nevatia: Understood. Just couple of more clarifications. On the royalty, for how long is it fixed and will it come for review every now and then in terms of percentage of sales?

Speaker #3: I don't know, Sumangal. I think that I would expect this to be there for a while at these levels.

Satish Pai: I don't know, Sumangal. I think that I would expect this to be there for a while at these levels.

Speaker #5: Okay, okay. But generally, we've seen there is agreement for three years, five years, and then it is reviewed. So, no such time period—you have any clarity today?

Sumangal Nevatia: Okay. Generally we've seen there is a agreement for three years, five years, and then it is reviewed. No such time period you have any clarity today?

Speaker #3: I don't have the clarity. I can check and get back to you.

Satish Pai: I don't have the clarity. I can check and get back to you.

Speaker #5: Sure, sure. That's fine. And I just want to understand, for next year, say FY28, what sort of domestic coal—or sorry, captive coal—production are we expecting for the full year, say, from Tesla and Banda?

Sumangal Nevatia: Sure. That's fine. I just want to understand, next year, say FY2028, what sort of captive coal production are we expecting for the full year, say from Chakla and Banda?

Satish Pai: Chakla will start to come in. We are expecting about 1 million tons from Chakla. Banda will only start from the middle of the year, I would say about half a million tons for Banda.

Speaker #3: Tesla will start to come in. We are expecting about 1 million tons from Chakla. Banda will only start from the middle of the year.

Speaker #3: So I would say about half a million tons for Banda.

Speaker #5: So, one and a half for next financial year, FY28, I'm asking, sir. Not '20. Okay. Okay. Okay.

Sumangal Nevatia: One and a half for next financial year, FY28, I'm asking, sir.

Satish Pai: Yes.

Sumangal Nevatia: Okay.

Speaker #3: Yes.

Satish Pai: Yes.

Speaker #5: Okay. And just last thing, do we expect any contribution from Aditya refinery and the phase one smelter anytime next year, or it's largely going to be end of year and then FY29 contribution?

Sumangal Nevatia: Okay. Just last thing, do we expect any contribution from Aditya Refinery and the phase I smelter anytime next year, or it's largely going to be end of year and then FY29 contribution?

Speaker #3: I think FY29, because it commissions December to January of this fiscal—sorry, next fiscal. So I would put FY29 as the full, meaningful numbers coming in.

Satish Pai: I think FY29 because it commissions December to January of next fiscal. I would put FY29 as the full contract, meaning meaningful numbers coming in.

Speaker #5: Got it. And just one last bookkeeping question: there's an intercompany profit in the India financials. What exactly is this? It's increased significantly quarter on quarter.

Sumangal Nevatia: Got it. Just one last bookkeeping. There's a intercompany profit in the India financials. What exactly is this? It's increased significantly quarter on quarter, around INR 750 odd crores.

Speaker #5: Around 750 odd crores.

Speaker #3: Yeah, I think that's because of the intercompany elimination, because an upstream sells to downstream and there is a mismatch between the price at which it was bought. And then we have to—so that is sitting in that correction there.

Satish Pai: Yeah, intercompany elimination because when upstream sells to downstream and there is a mismatch between the price at which it was bought and then we have to revalue if the LME goes up. That is sitting in that correction there.

Speaker #3: Again, better Subir will explain to you offline.

Sumangal Nevatia: Okay.

Satish Pai: Again, better Suvir will explain to you offline.

Speaker #5: Sure. Sure. I'll follow up. All right. Thank you and all the best, sir. Yeah.

Sumangal Nevatia: Sure. I'll follow up. All right. Thank you and all the best, sir. Yes.

Speaker #3: Thank you.

Satish Pai: Thank you.

Speaker #1: Thank you. The next question comes from the line of Pallava Agarwal with Antique Stock Broking Limited. Please go ahead.

Operator: Thank you. Next question comes from the line of Pallav Agarwal with Antique Stock Broking Limited. Please go ahead.

Speaker #5: Yeah, good evening, sir. So the first question was, is there any division to a copper quarterly EBITDA guidance? Do we expect sulfuric acid prices to stay elevated?

Pallav Agarwal: Yeah, good evening, sir. The first question was is there any revision to our copper quarterly EBITDA guidance? Do we expect sulfuric acid prices to stay elevated?

Speaker #3: Well, they are staying elevated, so I think you'd be fair to say a similar number like Q1 for Q2.

Satish Pai: Well, they are staying elevated, so I think it'd be fair to say a similar number like Q1 for Q2.

Speaker #5: Okay. And maybe some tapering off in the second half?

Pallav Agarwal: Okay, maybe some tapering off in H2?

Speaker #3: I hope not. Because with the TCRC so low, we are counting on sulfur. See, sulfur prices are impacted by the West Asia crisis, so sulfuric acid prices are driven by the sulfur index.

Satish Pai: I hope not because with the TC/RC so low we are counting on sulfuric. See, sulfur prices are impacted by West Asia prices. Sulfuric acid prices are driven by the sulfur index. If you follow the sulfur index, it's pretty high right now.

Speaker #3: So, if you follow the sulfur index, it's pretty high right now.

Speaker #5: Sure. Also, if you could just give us the quantum of external alumina series this quarter.

Pallav Agarwal: Sure. If you could just give us a quantum of external alumina sales this quarter.

Speaker #3: For external alumina sales, we actually missed one shipment, so it was 138 kt. Next quarter, we will be selling about 190 kt. We missed one ship sale.

Satish Pai: The external alumina sales, we actually missed one ship, so it was 138 KT. Next quarter we'll be selling about 190 KT. We missed one ship sale, that's why the volume is 138 this quarter.

Speaker #3: That's why the volume is 138 this quarter.

Speaker #5: Sure. And lastly, have we seen an uptick in global alumina prices because of the historic lows? So, are they picking up?

Dev Ahuja: Sure. Lastly, are we seeing an uptick in global alumina prices? Because they were at historic lows. Are they picking up?

Pallav Agarwal: Sure. Lastly, are we seeing an uptick in global alumina prices? Because they were at historic lows. Are they picking up?

Speaker #3: They are slightly picking up. I mean, right now, it's around 330, 340. So yes, it's a slight uptick. Yes.

Satish Pai: They are slightly picking up. Right now it's around 330, 340. Yes, it's a slight uptick. Yes.

Speaker #5: Sure, sir. Okay. Yeah, thank you so much.

Pallav Agarwal: Sure, sir. Okay. Yeah, thank you so much.

Speaker #3: Thank you.

Satish Pai: Thank you.

Speaker #1: Thank you. Next question comes from the line of Indrajit Agarwal with CLSA. Please go ahead.

Operator: Thank you. Next question comes from the line of Indrajit Agarwal with CLSA. Please go ahead.

Speaker #5: Hi, first year bookkeeping question. How has the cash cost been quarter over quarter in this quarter? And how do we expect next quarter?

Indrajit Agarwal: Hi. First, a bookkeeping question. How has the cash cost been quarter-over-quarter in this quarter, how do we expect it next quarter?

Speaker #3: Yeah. So, I think this quarter it was up by 5%—Q1 versus Q4. Actually, around 4%. I think I had guided 5%. It came in more or less at the same level.

Satish Pai: Yeah. I think this quarter it was up by 5% Q1 versus Q4. Actually around 4%. I think I had guided 5%. It came in more or less at that same level. Indrajit, I think actually we benefited from some of the low-cost inventories during Q1. Q2, the coal prices in the northern region have gone up in the monsoon period. We are expecting maybe another 5% to 6% increase Q2 to Q1.

Speaker #3: And Indrajit, I think actually we benefited from some of the low-cost inventories during Q1. In Q2, the coal prices in the northern region have gone up during the monsoon period.

Speaker #3: So, we are expecting maybe another 5 to 6 percent increase, Q2 over Q1.

Speaker #5: Sure. Secondly, if you can help with what is happening in the MJP physical market premium?

Indrajit Agarwal: Sure. Understood. Secondly, if you can help with what is happening in the MJP physical market premium.

Speaker #3: See, MJP is—yeah. Sorry, go ahead, please. Finish your question.

Satish Pai: The MJP. Sorry, go ahead, please. Finish your question.

Speaker #5: That has been elevated for a while. So, how do you see that panning out?

Indrajit Agarwal: That has been elevated for a while.

Satish Pai: Yes.

Indrajit Agarwal: How do you see that panning out?

Speaker #3: So the MJP is up because the Middle East supplies to Japan and impacted. So I think that as long as that metal is out of the market, the MJP will stay slightly high.

Satish Pai: The MJP is up because the Middle East supplies to Japan, Korea have been impacted. I think that as long as that metal is out of the market, the MJP will stay slightly high, and probably next year it will come down once Middle East smelters are back.

Speaker #3: And probably next year, it will come down once Middle East smelters are back online.

Speaker #5: So, are we changing our domestic and export sales mix because of this, or not?

Indrajit Agarwal: Are we changing our domestic and export sales mix because of this or not?

Speaker #3: No, I think that we certainly are trying to—on the exports, we try to get as much as we can. But no, I mean, because of our downstream requirements as well, and the Indian market is also still giving us a fairly good return.

Satish Pai: No. I think that we certainly are trying to, on the exports, we try to get as much as we can. No, because of our downstream requirements as well, the Indian market is also still giving us a fairly good return. I think we will try to catch a bit more exports, but not significantly change. No.

Speaker #3: So, I think we will try to catch a bit more exports, but not significantly change. No.

Speaker #5: Thank you. That's all from me.

Indrajit Agarwal: Thank you. That's all.

Speaker #3: Yeah.

Satish Pai: Yeah.

Speaker #1: Thank you. The next question comes from the line of Amit Lahotier with Aditya Birla Capital Institutional Equities. Please go ahead.

Operator: Thank you. Next question comes from the line of Amit Lahoti with Aditya Birla Capital Institutional Equities. Please go ahead.

Speaker #4: Hi, my first question is on the copper business. Given that TCRC continues to remain negative and byproduct prices are also normalizing, especially gold, and China is not closing its excess smelting capacity, how should we think about the backward integration plan in the medium term?

Amit Lahoti: Thanks. My first question is on the copper business. Given that TCRC is continuing to remain negative by-product prices are also normalizing, especially gold, China is now closing its excess smelting capacity. How do they think about the backward integration plan in the medium term? Can we look for more copper deposits within the country and move towards self-dependence for the concentrate supply? That's my first question.

Speaker #4: Can we look for more copper deposits within the country and move towards self-dependence for concentrate supply? That's my first question.

Speaker #3: Yeah, we're trying to do that. We have got one copper exploration block that we are actually evaluating and drilling holes in right now, and we are expecting some more blocks to come.

Satish Pai: Yeah, we're trying to do that. We have got one copper exploration block that we are actually evaluating and drilling holes right now. We are expecting some more blocks to come. We are looking at copper mines around the country and around in the neighboring countries. The copper mine prices, if you go to South America, Australia at these elevated LME levels, is very high. We have got 85% of our concentrate requirements blocked in. It's not a question of can we get concentrate. We will get the concentrate. The question becomes why would you go and pay money to get an equity in a mine at these elevated prices of LME? There's no problem with the security of supply for concentrate is what I'm trying to say. The backward integration, we are trying to look for mines.

Speaker #3: We are looking at copper mines around the country and in the neighboring countries. The copper mine prices, if you go to South America or Australia at these elevated LME levels, are very high.

Speaker #3: And we have got 85% of our concentrate requirements blocked in. So it's not a question of can we get concentrate. We will get the concentrate.

Speaker #3: So then the question becomes, why would you go and pay money to get an equity in a mine at these elevated prices of LME?

Speaker #3: There's no problem with the security of supply for concentrate, is what I'm trying to say. And for backward integration, we are trying to look for mines—we are exploring mines within the country.

Satish Pai: We are exploring mines within the country.

Speaker #4: So, is there any timeline when we could have some of the blocks ready with us? Maybe, is it two years, or is it like five years from now?

Amit Lahoti: Any timeline when we could have some of the blocks ready with us? Maybe is it two years or is it five years from now?

Speaker #3: Within a year, we are evaluating and will get to know in another year. The preliminary samples are looking good, but the extent and the volumes will probably take more than another year to evaluate.

Satish Pai: I think this block that we are evaluating, we'll get to know in another year. The preliminary samples are looking good, but the extent and the volumes, which will probably take another year to evaluate it.

Speaker #4: Sure. My second question is a novel list. As we target net leverage of four times, which is essentially a function of either net debt coming down or a bit of going up, and given that we are close to 2 billion dollars of EBITDA run rate, which implies that 8 billion dollars of net debt, we are already pretty likely at four times.

Amit Lahoti: Sure. My second question is on Novelis. As they target net leverage of 4x, which is essentially a function of either net debt coming down or EBITDA going up. Given that we are close to INR 2 billion of EBITDA run rate, which implies that INR 8 billion of net debt, we are already pretty likely at 4x. Can we rather not expect a level which is well below 4x?

Speaker #4: So can we, rather, not expect a level which is well below four times?

Satish Pai: Dev, I think we got the question in your call as well.

Speaker #3: Dave, I think we got the question in your call as well, sir.

Speaker #5: Yeah, yeah. So I already said that, based on all the visibility that I can see right now, we will be below 4. Now, your other question is about whether it is a function of lower net debt or EBITDA?

Steve Fisher: Yeah. I already said that based on all the visibility that I can see right now, we will be below 4. Now, your other question is about what is it between a function of lower net debt and EBITDA? It is both. We will be releasing cash into the system. Why? Because we will get more insurance recoveries. We will release some working capital as our supply chains normalize. That basically brings in more cash and reduces net debt. Gross debt as well, because our short-term borrowing facilities like ABL will go down. EBITDA run rate will go up. It is not one factor. It is both factors that will help us move in a positive direction.

Dev Ahuja: Yeah. I already said that based on all the visibility that I can see right now, we will be below 4. Now, your other question is about what is it between a function of lower net debt and EBITDA? It is both. We will be releasing cash into the system. Why? Because we will get more insurance recoveries. We will release some working capital as our supply chains normalize. That basically brings in more cash and reduces net debt. Gross debt as well, because our short-term borrowing facilities like ABL will go down. EBITDA run rate will go up. It is not one factor. It is both factors that will help us move in a positive direction.

Speaker #5: It's both. I mean, we will be releasing some cash into the system. Why? Because we will get more insurance requirements. We will release some working capital as our supply chains normalize.

Speaker #5: That basically brings in more cash and reduces net debt—gross debt as well—because our short-term borrowing facilities, like the ABL, will go down. The EBITDA run rate will go up.

Speaker #5: So it's not one factor; it is one factor that will help us move in a positive direction. And that's fine. I mean, from a level of 4.5, when we are saying it will grow—and by the way, the PE will probably be a little bit higher at the end of September.

Steve Fisher: That's why, I mean, from a level of 4.5, when we are saying it will go. By the way, the peaking will be probably a little bit higher at the end of September. That will be the peak net leverage. For it to come down so sharply, it has to be a function of both.

Dev Ahuja: That's why, I mean, from a level of 4.5, when we are saying it will go. By the way, the peaking will be probably a little bit higher at the end of September. That will be the peak net leverage. For it to come down so sharply, it has to be a function of both.

Speaker #5: That will be the peak net leverage. So from there, for it to come down so sharply, I mean, it has to be a function of both.

Speaker #4: Sure. Thanks, Dave.

Amit Lahoti: Sure. Thanks, Dave.

Speaker #5: Perfect. Thanks.

Steve Fisher: Perfect. Thanks.

Dev Ahuja: Perfect. Thanks.

Speaker #1: Thank you. The next question comes from Ritesha with Investech India. Please go ahead.

Operator: Thank you. Next question comes from the line of Ritesh Shah with Investec India. Please go ahead.

Speaker #5: Yeah, hi. Thanks for the opportunity. A few questions. First, for Novelis, would it be possible to quantify the extent of working capital release over the next three quarters?

Ritesh Shah: Yeah. Hi. Thanks for the opportunity. A few questions. First for Novelis. Would it be possible to quantify the extent of working capital release over the next three quarters?

Speaker #3: Yes. Dave?

Dev Ahuja: Dave? Sorry, I was muted. Sorry. Yeah. It's difficult to be very precise, but I think that three to four-

Satish Pai: Dave?

Speaker #5: Sorry, sorry, I was on mute. Sorry. Yes, I mean, it's difficult to be very precise, but I think that's 300 to 400 million. Sorry to interrupt.

Dev Ahuja: Sorry, I was muted. Sorry. Yeah. It's difficult to be very precise, but I think that three to four-

Operator: Sorry to interrupt. Your voice is breaking. Can you cover the range a little bit?

Speaker #5: Something that.

Speaker #1: Your voice is breaking. Can you come into range and talk?

Speaker #5: Oh, one minute. One minute. Give me a moment. Let me see. I'll just check my headphones for one minute.

Dev Ahuja: One minute. Give me a moment. Let me see. I'll just check my headphones. One minute.

Speaker #1: Sure. Thank you.

Operator: Sure. Thank you.

Speaker #5: Are you better now?

Dev Ahuja: Are you hearing me better now?

Speaker #1: Oh, yes. Please go ahead.

Operator: Yes. Please go ahead.

Speaker #5: Okay. Okay. All right. Yeah. So, what I was saying is that, look, I mean, being very precise right now is a bit difficult. We are working on many fronts.

Dev Ahuja: Okay. All right. Yeah. What I was saying is that, look, I mean, being very precise right now is a bit difficult. We are working on many fronts, but if you want something directionally, I can see INR 300 to 400 coming out the system, in the next couple of quarters, which is a reduction of inventory, but also straight off line reduction of payables, because we have been buying a lot of third-party material, and as we normalize our working capital cycle, all the payables on that account will go away. Net-net, I think, for modeling purpose, you can take INR 300 to 400 over the next couple of quarters. We'll see if we can do better than that.

Speaker #5: But if you want something directionally, I can see 300 to 400 coming off the system in the next couple of quarters, which is a reduction of inventory.

Speaker #5: But also, a set of reduction of payables, because we have been buying a lot of third-party material. And as we normalize our working capital cycle, all the payables on that account will go away.

Speaker #5: So net-net, I think for modeling purposes, you can take 300 to 400 over the next couple of quarters. We'll see if we can do better than that.

Speaker #1: Sure. My second question is, I think you had a prior question on tariffs of $70 million. If you could put that in context, how does USMCA stack up for things, as there is certainly a yo-yo going on between the governments over there.

Ritesh Shah: Sure. My second question is, I think, you had a prior question on tariffs of INR 70 million. If you could put in context, how does USMCA stack up for things? There's certainly a yo-yo going on between the government over there, between the Canadian and the US government. What is the sort of impact?

Speaker #1: Between the Canadian and the US government, what is the sort of impact in this $70 million? So basically, you did indicate the $70 million can actually go towards NIL by end of the fiscal.

Steve Fisher: Yeah

Ritesh Shah: In this $70 million? Basically, you did indicate the $70 million can actually go towards nil by end of the fiscal. What is the underlying assumption with respect to the material which moves to Kingston and back to US?

Speaker #1: So what is the underlying assumption with respect to the material which moves to Kingston and back to the US?

Speaker #5: Yeah, so it has nothing to do with the USMCA, to be clear. But when I say that it will go down as we normalize the supply chain, it's that we will depend less on imports.

Steve Fisher: Yeah. It has nothing to do with the USMCA, to be clear. When I say that it will go down as we normalize the supply chain, is that we are dependent on imports and imports attract 232 tariffs. Okay? Basically, our 232 net tariffs will go down by the end of the year because of less dependence on imports as our recovery normalizes and post that, our supply chains normalize. It is as simple as that. As far as USMCA is concerned and those tariffs, honestly, nobody knows. I mean, this is going to be a bit long drawn from the best that we can read in the current environment. We are not expecting that to be any major impact. If something happens, we will have to see. Right now, there is no basis to believe that anything quite will happen there.

Speaker #5: And imports attract 232 tariffs, okay? So basically, our 232 net tariffs will go down by the end of the year because of less dependence on imports.

Speaker #5: As Oswego normalizes and posts that, our supply chains normalize. So it's as simple as that. As far as USMCA is concerned and with tariffs, honestly, nobody knows.

Speaker #5: I mean, this is going to be a bit long drawn from the best that we can read in the current environment, so we are not expecting there to be any major impact.

Speaker #5: If something happens in legacy, but right now, there is no basis to believe that anything will happen there.

Speaker #1: Sure. And just a third question on payment. We indicated that we have certain contracts until the end of the year. We have kept certain contracts open.

Ritesh Shah: Sure. Just third question on payment. We indicated that we have certain contracts until end of the year. We have kept certain contracts open. Just wanted to have your comfort assuming, say, 9.2% WACC for Novelis. Will we be able to cover our cost of capital over here? The ask will be significantly steep upwards of $1,000. Are we still comfortable over here?

Speaker #1: I just wanted to have your comfort, assuming say 9%, 9.2% VAT for Novelis. Will we be able to cover our cost of capital over here?

Speaker #1: The ask will be significantly steep, upwards of $1,000. So, are we still comfortable over here?

Speaker #5: We are very comfortable. We don’t agree with the 9%, honestly. Our VAT is lower. But I can give you a very confident assurance that we will cover the cost of capital.

Steve Fisher: We are very comfortable. We do not agree with the 9%, honestly, our WACC is lower. I can give you a very confident assurance that we will cover the cost of capital. This project has potential. I mean, despite the higher cost that happened, this project has potential to unlock value. On that front, we are very confident.

Speaker #5: This project has potential. I mean, despite the higher cost that occurred, this project has potential to unlock value. So, on that front, we are very confident.

Speaker #1: If you can help me correct the VAC number, should we break it into 8, 8 and a half?

Ritesh Shah: If you can help me correct on the WACC number, should we be between, say, 8.5?

Speaker #5: I mean, it is not 9. It is like, in the high, we don't do this. But I mean, all that I'm telling you is that our cost of capital is not 9.

Steve Fisher: It is not 9. It is like in the high We don't do this. All that I'm telling you is that our cost of capital is not 9. It is lower than that. If you want to take 8, you're not too far off.

Speaker #5: It is lower than that. I mean, if you want to take, if you want to take 8, you're not too far off.

Speaker #1: Sure, that helps. My second question is for Mr. Pai. Sir, when we look at the capex that we have announced for India operations, and when we look at capex intensity—specifically for the Sambalpur smelter—on a per-ton basis, it looks very steep as compared to the recent announcements in the country.

Ritesh Shah: Sure. That helps. My second question is for Mr. Pai. Sir, when we look at the CapEx that we have announced for India operations, when we look at CapEx intensity, specifically for the Sambalpur smelter, on a per ton basis, it looks very steep as compared to the recent announcements in the country. I presume a part of it could be because of RTC facilities that we have, or I'm not sure whether we have coupled downstream assets also inside that CapEx.

Speaker #1: I presume a part of it could be because of RTC facilities that we have, or I'm not sure whether we have coupled downstream assets also inside that Capex.

Satish Pai: Right.

Speaker #1: What is the best way to appreciate this?

Ritesh Shah: What is the best way to appreciate this?

Speaker #3: I think that I've answered now to a couple of media people as well. Don't go by capex by people announcements; go by capex by people who actually have done the projects.

Satish Pai: I think I've answered now to a couple of media people as well. Don't go by CapEx by people announcements. Go by CapEx by people who actually have done the projects. I think just making an announcement, I'm going to do X in X, I think the reality only happens when you actually place orders and there's been reality on the ground of what has happened with inflation, metal prices and all that. My only thing is that whatever we say and do, we have calculated, and we are quite sure of it. What others have claimed and said, those are announcements in my opinion.

Speaker #3: I think just making an announcement, I'm going to do X in X. I think the reality only happens when you actually place orders and there's been reality on the ground of what has happened with inflation, metal prices, and all that.

Speaker #3: So my only thing is that whatever we say and do, we have calculated, and we are quite sure of it. What others have claimed and said—those are announcements, in my opinion.

Speaker #1: Fair, perfect. And just one last question on ESG—there’s a recent proposal regarding a single default value on carbon. This is intended more to simplify CBAM and avoid distortions.

Ritesh Shah: Perfect. Just a last question on ESG. There's a recent proposal with respect to a single default value on carbon. This is more to simplify CBAM and avoid distortions. If there is a single default value for, say, India, basically how should one look at it? Specifically, we are focusing on ESG and our CapEx is also high. If something of the sort comes, how are we approaching it?

Speaker #1: If there is a single default value for, say, India, basically, how should one look at it specifically? We are focusing on ESG and our capex is also high.

Speaker #1: So if something of this sort comes, how should we — how are we approaching it?

Speaker #3: I just wanted to sort of, a little bit, challenge that. I don't think our Capex is high. If you look at any of the Western world smelter announcements and the cost, I think we are highly competitive.

Satish Pai: I just wanted to sort of little bit challenge. I don't think our CapEx is high. If you look at any of the Western world smelter announcements and the cost, I think we are highly competitive. The second part, when you say single part, are you talking about the cost of carbon?

Speaker #3: The second part, when you say 'single path,' are you talking about the cost of carbon?

Speaker #1: Yes. Carbon intensity per ton of aluminum.

Ritesh Shah: Yes. Carbon intensity per tonne of aluminum.

Speaker #3: No, per ton of aluminum, look, there is no single number there. People have taken, like, six tons per ton to be sort of the limit at which they will start to say this is low-carbon aluminum.

Satish Pai: No. Per ton of aluminum, look, there is no single number there. People have taken 6 tons per ton to be sort of the limit at which they will start to say this is low carbon aluminum. Let me be clear that there is no consistency across any of the markets today on what really constitutes low carbon aluminum. If you look at the plat index, the sort of upside on low carbon aluminum is $15 to $25, which is negligible. I don't think that right now what worries me more is things like CBAM, where there is an actual price of carbon, which is found out by trading on the European market, or there's a cost of carbon actually that's developing in India on the CCTS platform.

Speaker #3: But let me be clear that there is no consistency across any of the markets today on what really constitutes low carbon aluminum. And if you look at the Platts index, the sort of upside on low carbon aluminum is $15 to $25, which is hard negligible.

Speaker #3: So, I don't think that right now. What worries me more is things like CBAM, where there is an actual price of carbon, which is found out by trading on the European market.

Speaker #3: Or there's a cost of carbon actually that's developing in India on the CTS platform. So I think those are the things to watch, because in Europe it's more like €80 per ton of carbon, which is pretty high.

Satish Pai: I think those are the things to watch, because in Europe it's more like €80 per ton of carbon, which is pretty high.

Speaker #1: Sure. Just the last two questions to squeeze in. One is the outlook on alumina. And secondly, specifically on bauxite—I think at Bapi Mali, we have adequate lease life.

Ritesh Shah: Sure. Just sir, last two questions I'll squeeze in. One is outlook on alumina and secondly, specifically on bauxite, I think Baphlimali we have adequate lease life. There were two other blocks, Dumdri and Surbeña. Would you like to comment on what the status is over there and any color on basically participating in the bauxite auctions which are going on in the country?

Speaker #1: There were two other blocks, Damchua and Surbena. Would you like to comment on what the status is over there, and any color on basically participating in the bauxite auctions which are going on in the country?

Speaker #3: Have you seen the results of the auction that just finished today? So, Karla Park just finished at 175 premium, which takes the cost of bauxite to about 8,000 rupees a ton.

Satish Pai: Have you seen the results of the auction that just finished today?

Ritesh Shah: Yes.

Satish Pai: Karlapat just finished at 175 premium, which takes the cost of bauxite like INR 8,000 a ton. Let me say that we are not new entrants to this field. Again, we have bauxite mines in Chhattisgarh, Jharkhand, and Odisha, and we will maintain, I think, a far more prudent financial way of looking at how we participate and what we are prepared to pay. Those two mines you mentioned, I've never heard of them.

Speaker #3: So let me say that we are not new entrants to this field. Again, we have bauxite mines in Chhattisgarh, Jharkhand, and Odisha. And we will maintain, I think, a far more prudent financial way of looking at how we participate and what we are prepared to take.

Speaker #3: And those two mines you mentioned, I've never heard of them.

Speaker #1: Okay, sir. I'll send you a mail on that separately.

Ritesh Shah: Okay. Sir, I'll send you a mail on that, sir, separately.

Speaker #3: Sir, the Odisha auctions are ongoing right now. So, Karla Park just finished, and there are four more mines that will happen over the next month.

Satish Pai: The Odisha auctions are ongoing right now. Karlapat just finished, and there are other four more mines that will happen over the next month.

Speaker #1: Okay. And on alumina outlook?

Ritesh Shah: Okay.

Satish Pai: Thank you.

Ritesh Shah: On alumina outlook.

Speaker #3: So alumina look, the prices are around 330, 340 dollars now. I think that there is as long as the Middle East smelters are out, that alumina because that's the largest third-party alumina market because China is more or less self-sufficient now.

Satish Pai: Alumina, look, the prices are around $330, $340 now. I think that as long as the Middle East smelters are out, that alumina, because that's the largest third party alumina market, because China is more or less self-sufficient now. I think that until the Middle East smelters come back, it will remain in that range.

Speaker #3: So, I think that until the Middle East smelters come back, it will remain in that range.

Speaker #1: Sure, this is helpful. Thank you so much. All the very best.

Ritesh Shah: Sure. This is helpful. Thank you so much. All the very best.

Speaker #3: Thanks. Thank you.

Satish Pai: Thank you.

Operator: Thank you. A reminder to all the participants, please restrict yourself to two questions. Next question comes from the line of Rahul Gupta with Morgan Stanley. Please go ahead.

Speaker #1: Thank you. A reminder to all participants: please restrict yourselves to two questions. The next question comes from the line of Rahul Gupta with Morgan Stanley.

Speaker #1: Please go ahead.

Speaker #4: Hi. Thank you for taking my question. If we remember, last year in your analyst day, you had guided to four times your EBITDA for the downstream business in India by fiscal '30.

Rahul Gupta: Hi, thank you for taking my question. If you remember, last year in your analyst day, you had guided to four times of your EBITDA for downstream business in India by fiscal 2030.

Satish Pai: Yes.

Speaker #4: If I look at fiscal ’25 and ’26 cumulatively, it is around ₹36 to ₹38 billion of EBITDA. Now, can you help us understand how you are planning to get to ₹145 to ₹150 billion of EBITDA in four years?

Rahul Gupta: If I look at fiscal 2025 and 2026, cumulatively is around INR 36 to 38 billion of EBITDA. Can you help us understand how are you planning to get to INR 145 to 150 billion of EBITDA in four years? To that extent, how should we think about margins for downstream aluminum and copper business? Thank you.

Speaker #4: And to that extent, how should we think about margins for the downstream aluminum and copper business? Thank you.

Speaker #3: So first, let me clarify what we meant by the downstream. So in that downstream, we include aluminum downstream, aluminum specialty sales, as well as the copper downstream.

Satish Pai: First let me clarify what we meant by the downstream. In that downstream, we include aluminum downstream, aluminum specialty sales, as well as the copper downstream. These three put together is what we consider the Hindalco downstream business. That we said is going to go 4X, not just the aluminum downstream.

Speaker #3: So these three, put together, are what we consider the Hindalco downstream business. And that, we said, is going to go 4X—not just the aluminum downstream.

Speaker #4: No, that's true. I take into account all these three. I'm just giving an example that when you talk about $300, it is not sustainable for downstream aluminum, and maybe $250 is more sustainable, at least beyond volatility.

Rahul Gupta: No, that's true. I take into account all these three.

Satish Pai: Yeah.

Rahul Gupta: I'm just giving an example that when you talk about INR 300 are not sustainable for downstream aluminum, and maybe INR 250 is more sustainable, at least beyond-

Satish Pai: For this year

Rahul Gupta: near-term volatility. How should we think about it maybe from a fiscal 2029, 2030 perspective, and how should we think copper business ramping up beyond the near-term benefits?

Speaker #4: How should we think about it? Maybe from a fiscal '29, '30 perspective? And how should we think about the copper business ramping up beyond the near-term benefits?

Speaker #3: So again, the $250 I said was for the remaining quarters of this year because Aditya FRP is just ramping up. So I think the longer-term aluminum downstream EBITDA per ton, we have always said, is going to be over $300.

Satish Pai: Again, the $250 I said was for the remaining quarters of this year because Aditya FRP is just ramping up. I think the longer term aluminum downstream EBITDA per ton, we have always said is going to be over $300. I think that what we probably will have to do is to give more clarity on the copper downstream, because today we merge it all together. I will try to give more clarity on the total downstream, probably in the next quarter. You will see that we are progressing quite well. The margins on that downstream side tend to be much higher than what we were expecting. The real challenge there is getting the products qualified and the volumes going up on the downstream side.

Speaker #3: And I think that what we probably will have to do is to give more clarity on the copper downstream, because today we merge it all together.

Speaker #3: So I will try to give more clarity on the total downstream, probably in the next quarter. You will see that we are progressing quite well.

Speaker #3: The margins on that downstream time tend to be much higher than what we were expecting. The real challenge there is getting the products qualified and the volumes going up on the downstream side.

Rahul Gupta: That's reassuring. The thing that we are trying to understand is that how should we model from, say, INR 40 billion to INR 140 billion over the next three, four years? Yeah, we'll wait for more color on that.

Speaker #4: That's reassuring. So what the thing that we are trying to understand is that how should we model from, say, 40 odd billion rupees to 140 odd billion rupees over the next three, four years?

Speaker #4: But yeah, we'll wait for more color on that. My final question is, can you help us understand in more detail how to look at what you're talking about?

Satish Pai: Yes.

Rahul Gupta: My final question is, can you help us understand more in detail how to look at the royalty payments that you're talking about? I'm sorry to harp on it again, just to understand this better, if you have any clarity on this.

Speaker #4: I'm sorry to harp on it again, but just to understand this better—if you have any clarity on this.

Speaker #3: No, I don't have anything further than what I've already said. I mean, the brand is held by Builder Group Holdings Private Limited, which has not, in the past, charged any royalty.

Satish Pai: No, I don't have any further than what I said. I mean, the brand is held by Birla Group Holdings Private Limited, which has not in the past charged any royalty. Now we are putting in a framework where royalty will be charged, investments will be done to enhance the brand, and it's as a percentage of the revenue capped at INR 225 crores a year. Hindalco and Novelis will pay INR 225 crores per year.

Speaker #3: Now there's—you're putting in a framework where royalties will be charged. Investments will be done to enhance the brand, and it's as a percentage of the revenue, capped at ₹225 crore a year.

Speaker #3: So, Hindalco and Novelis will pay ₹225 crore per year.

Speaker #4: Yeah, no, that I understand. Sorry, one follow-up on this: does this in any way distort the dividend payout policy for the company?

Rahul Gupta: Yeah. No, that I understand. Sorry, one follow-up on this. Does this in any way distort a dividend payout policy for the company?

Speaker #3: No, no. I mean, just again, I'll repeat: this is significantly below any materiality point. I'll go—it doesn't change capital allocation, dividend, nothing. No.

Satish Pai: No. Again, I'll repeat, this is significantly below any materiality for Hindalco. It doesn't change capital allocation, dividend, nothing. No.

Speaker #4: Got it. Thank you so much. Wish you all the best.

Rahul Gupta: Got it. Thank you so much. Wish you all the best.

Speaker #3: Yeah.

Satish Pai: Yeah.

Speaker #1: Thank you. Next question comes on the line of Vikas Singh with ICICI Securities. Please go ahead.

Operator: Thank you. Next question comes from the line of Vikas Singh with ICICI Securities. Please go ahead.

Speaker #5: Good evening, sir, and thank you for the opportunity. And congratulations on a very good set of numbers. Sir, my question pertains to the incidence gain in Novelis.

Vikas Singh: Good evening, sir, and thank you for the opportunity, and congratulations on a very good set of numbers. My question pertains to the insurance claim in Novelis. If I remember, we claimed that at least 75% of all the business losses would be recoverable from the insurance claim. Since we got the first tranche, any idea as to what is the total sum which we will get, and how this will be coming through in the next quarter, or how this will be spread out in the next few quarters?

Vikash Singh: Good evening, sir, and thank you for the opportunity, and congratulations on a very good set of numbers. My question pertains to the insurance claim in Novelis. If I remember, we claimed that at least 75% of all the business losses would be recoverable from the insurance claim. Since we got the first tranche, any idea as to what is the total sum which we will get, and how this will be coming through in the next quarter, or how this will be spread out in the next few quarters?

Speaker #5: If I remember, we claimed that at least 75% of all the business losses would be recoverable from the incidence gain. So since we got the first tranche, any idea what is the total from which we will get, and how this will be coming in the next quarter, or how this will be spread out in the next few quarters?

Speaker #3: Yeah. Dave?

Satish Pai: Dev?

Steve Fisher: Yes. I think that we have explained that. Look, as of the end of this quarter, our cumulative cash flow impact has been of the order of $1.4 billion net of all recoveries, which is $300 million so far. We expect steady insurance recoveries. It is almost impossible to exactly time them. It is a process. Net, what I can guide you is that at the end, when all insurance recoveries come, our net loss cash impact from the file will be about $600 million. Right? The $1.4 billion impact so far will keep coming down with insurance recoveries, and at the end will be left to bear net about approximately $600 million. Now, timing, we expect, as I said, steady recoveries, but a couple of 100 million may go into the following fiscal year, i.e., fiscal year 2028.

Dev Ahuja: Yes. I think that we have explained that. Look, as of the end of this quarter, our cumulative cash flow impact has been of the order of $1.4 billion net of all recoveries, which is $300 million so far. We expect steady insurance recoveries. It is almost impossible to exactly time them. It is a process. Net, what I can guide you is that at the end, when all insurance recoveries come, our net loss cash impact from the file will be about $600 million. Right? The $1.4 billion impact so far will keep coming down with insurance recoveries, and at the end will be left to bear net about approximately $600 million. Now, timing, we expect, as I said, steady recoveries, but a couple of 100 million may go into the following fiscal year, i.e., fiscal year 2028.

Speaker #6: Yes, so I think that we have explained that. So, as of the end of this quarter, our cumulative cash flow impact has been of the order of $1.4 billion, net of all recoveries, which is $300 million.

Speaker #6: So far, we expect steady insurance recoveries. It is almost impossible to exactly time them—it's a process. Net-net, what I can guide you is that at the end, when all insurance recoveries come, our net loss cash impact from the fire will be about $600 million.

Speaker #6: Right? So the $1.4 billion impact so far will keep coming down with insurance recoveries, and in the end, we'll be left to bear net about approximately $600 million.

Speaker #6: Now, timing, we expect as I said, steady recoveries, but a couple of hundred million a couple of hundred million may go into the following fiscal year, i.e., fiscal year 28, but a good decent recovery will happen within this fiscal year.

Steve Fisher: A good, decent recovery will happen within this fiscal year.

Dev Ahuja: A good, decent recovery will happen within this fiscal year.

Speaker #5: Noted, sir. Sir, I probably missed out on our total hedging on the aluminum side, as well as the cost inflation in Q2. If you could repeat that intro?

Vikas Singh: Noted, sir. I probably missed out on our total hedging on the aluminum side as well as the cost inflation in Q2. If you could repeat the same thing.

Vikash Singh: Noted, sir. I probably missed out on our total hedging on the aluminum side as well as the cost inflation in Q2. If you could repeat the same thing.

Speaker #3: I'll repeat it. So, for FY27, we are hedged 29% at $3,004 a ton, and the currency is 18% at 91.63. Our costs went up by about 5% from Q1 to Q4.

Satish Pai: I'll repeat it. For FY27, we have hedged 29% at $3,004 a ton, and the currency 18% at 91.63. Our costs went up by about 5% Q1 to Q4, and we are expecting another 5%, 6% Q2 to Q1 in INR terms.

Speaker #3: And we are expecting another 5–6% increase in Q2 compared to Q1, in rupee terms.

Speaker #5: Noted. Sir, just one clarification. If I remember correctly, last quarter we said that we stopped hedging once the war erupted. So, why does the blend still seem to be on the lower side?

Vikas Singh: No, just one clarification. If I remember correctly, last quarter we said that we have stopped hedging once the war has erupted.

Vikash Singh: No, just one clarification. If I remember correctly, last quarter we said that we have stopped hedging once the war has erupted.

Satish Pai: Yeah

Vikas Singh: This is still on, the blend seems to be on a lower side.

Vikash Singh: This is still on, the blend seems to be on a lower side.

Speaker #5: So just.

Speaker #3: No, no. I think this year, if you take FY27, we stopped because it's in a deep backwardation. So this year, we are not adding any more.

Satish Pai: No, I think this year, if you take FY27, we stopped because it's in a deep backwardation. This year we are not adding any more. The hedging that we are doing from now on is for FY28. FY27, if you take the number that I had last time and now, there is no change.

Speaker #3: The hedging that we are doing from now on is for FY28. For FY27, if you take the number that I had last time and now, there is no change.

Speaker #5: Noted, sir. Noted. And for '28, what's the—how much is hedged at what price?

Vikas Singh: Noted. For 2028, how much is hedged, at what price?

Vikash Singh: Noted. For 2028, how much is hedged, at what price?

Speaker #3: So 28 currently now FY 28, we are at where are we? 21% at 3160. And we are trying to catch levels at 3,200. Our view on FY 28 yeah, FY 28 is that once the Middle East smelters come back, we think that 3,200 is a good level for FY 28.

Satish Pai: 2028, currently now FY28, where are we? 21% at INR 3,160. We are trying to catch levels at INR 3,200. Our view on FY28 is that once the Middle East smelters come back, we think that INR 3,200 is a good level for FY28. It's a high CapEx year for us, we want to protect our cash flows for FY28.

Speaker #3: It's a high CAPEX year for us, so we want to protect our cash flow for FY28.

Speaker #5: Very well, sir. Thank you, and all the best for the future.

Vikas Singh: Very well, sir. Thank you, and all the best for future.

Vikash Singh: Very well, sir. Thank you, and all the best for future.

Speaker #3: Yeah. Thank you.

Satish Pai: Yeah, thank you.

Speaker #1: Thank you. Next question comes from the line of Rajesh Majumdar with 361 Capital. Please go ahead.

Operator: Thank you. Next question comes from the line of Rajesh Majumdar with 361 Capital. Please go ahead.

Speaker #7: Yeah, thanks for the opportunity, sir. My first question is on the copper smelter expansion. With the current crisis going on in the concentrate market, how— I mean, how bad or good is the timing for the copper smelter expansion?

Rajesh Majumdar: Yeah, thanks for the opportunity, sir. My first question is on the copper smelter expansion.

Satish Pai: Yeah.

Rajesh Majumdar: With the current crisis going on in the concentrate market, how bad or good is the timing for the copper smelter expansion? A related question is that can we be using scrap instead of concentrate in the smelter to get a different product mix as you have the smelter going to be commissioned in FY2029? Yeah.

Speaker #7: And a related question is: can we use scrap instead of concentrate in this smelter to get a different product mix, as you have the smelter scheduled to be commissioned in FY29?

Speaker #7: Yeah.

Speaker #3: So really, my theory always has been that you should do a smelter when it's the most adverse condition, because by the time the smelter comes up, it will be three years out.

Satish Pai: Really my theory always has been that you should do a smelter when it's the most adverse condition, because by the time the smelter comes up, it'll be three years out. We look at these things in the long term, and I think that if you look at the downstream copper demand in India, you look at the supply chain of precious metals and all that, we think it will still give us a good return. Having the capacity in India, where the market demand is very strong, we think will be economically beneficial. On the scrap, yes, the smelter uses some scrap, but we also have the scrap smelting project in Dahej commissioning this year. We'll be using quite a lot of copper scrap as well. That is certainly more financially viable.

Speaker #3: So, we look at these things in the long term. And I think that if you look at the downstream copper demand in India, you look at the supply chain of precious metals and all that, we think it will still give us a good return.

Speaker #3: And having the capacity in India, where the market demand is very strong, we think will be economically beneficial. On the scrap, yes, the smelter uses some scrap, but we also have the scrap melting project in Pakhajan commissioning this year.

Speaker #3: So, we'll be using quite a lot of copper scrap as well, and that is certainly more financially viable.

Speaker #7: And sir, what are the economics of the waste recycling project if you're going to commission it in FY27? A brief idea on that?

Rajesh Majumdar: And sir, what are the economics of the waste recycling project? Is it going to commission FY2027? A brief idea on that.

Speaker #3: So actually, we'll have to wait till some of these metals that we are looking at come out. But on a pure copper term, the return right now is quite attractive compared to the copper smelting.

Satish Pai: Actually, we'll have to wait till some of these metals that we're looking at comes out. On a pure copper terms return right now is quite attractive compared to the copper smelting. When I say copper smelting, I'm taking the sulfuric acid sale along with it. It's still recycling is quite more attractive than that.

Speaker #3: And when I say copper smelting, I'm taking the sulfuric acid sale along with it. Still, recycling is quite a bit more attractive than that.

Speaker #7: If you pin you down to a kind of payback here, will it be possible for you to give that on the recycling?

Rajesh Majumdar: If you pin it down to a kind of payback year, will it be possible for you to give that on the recycling?

Speaker #3: So, the IRR of the project is in the high teens, so that should tell you the payback.

Satish Pai: The IRR of the project is in the high teens, so that should tell you a payback.

Speaker #7: That's useful. And sir, my other question is on the Aditya Alumina Refinery, because already 95% of purchase orders have been placed. That will probably come somewhere in the middle of FY28, if I'm not mistaken.

Rajesh Majumdar: Sir, my other question is on Aditya Aluminum Refinery, because that is already 95% purchase order has been placed, and that will come probably somewhere in the middle of FY28, if I'm not mistaken. I think

Speaker #7: So I think maybe for a year, we'll be okay. And because Aditya Aluminium smelter will not come before, of emergent alumina, we'll be selling, say, in FY28 and that kind of figure, or FY27, FY28?

Satish Pai: No.

Rajesh Majumdar: Okay. Because Aditya Aluminum smelter will not come before FY29, so what is the kind of merchant alumina will be selling, say, in FY28 and that kind of figure? Or FY27 or FY28?

Speaker #3: The first 180 pots of the Aditya smelter will come at exactly the same time as the refinery coming up. So, the Aditya smelter expansion is in two phases: 180, 180.

Satish Pai: First, the 180 pots of Aditya smelter will come at exactly the same time as the refinery coming up.

Rajesh Majumdar: Okay.

Satish Pai: The Aditya smelter expansion is in two phases, 180. The first 180 will come in December 2027. The next 180 will come in December 2028. We will still be net long of alumina of about 800, which we will continue, which is just our position today.

Speaker #3: The first 180 will come in December of '27. The next 180 will come in December of '28. We will still be net long on alumina by about 800, which we will continue—this is just our position today.

Speaker #7: Okay. That is, again, probably the same amount—not significant. And sir, can you give me the combined impact of the cost savings of the captive coal mines, Chakla Bhwanda, and Meenakshi when fully commissioned?

Rajesh Majumdar: Okay. It will remain broadly the same.

Satish Pai: Yeah.

Rajesh Majumdar: significant. Sir, can you give me the combined impact of the cost savings of the captive coal mines, Chakla, Banda, and Meenakshi when fully commissioned? What is the combined impact of the coal input on basis of aluminum making cost?

Speaker #7: What is the combined impact of coal import on the basis of aluminum making cost?

Speaker #3: I think I'll leave it at that and say it will be fairly attractive. I think you will see it in our results as they come in.

Satish Pai: I think I'll leave it at to say that it'll be fairly attractive. I think you will see it in our results as they come in.

Rajesh Majumdar: Okay.

Speaker #3: Thank you.

Satish Pai: Thank you.

Speaker #7: So, is it possible to give a per-ton cost for the FY28 reduction on the coal of 1.5 or, whatever, 1.6 million tons we talked about from Chakla?

Rajesh Majumdar: Sir, is it possible to give a per tonne cost for FY28 reduction on the coal of 1.5 or whatever, 1.6 million tonnes we talked about from Chakla and Banda?

Speaker #3: No. No, no.

Satish Pai: No.

Speaker #7: Okay.

Rajesh Majumdar: Okay.

Speaker #3: Again, I won't do that. Thank you.

Satish Pai: I won't do that.

Rajesh Majumdar: Thank you.

Satish Pai: Thank you.

Speaker #1: Thank you. Ladies and gentlemen, due to time constraints, this was the last question. You can connect with the IR team for any further questions. I now end the conference and hand it over to the management for closing comments.

Operator: Thank you. Ladies and gentlemen, due to time constraints, this was the last question. You can connect with IR team for your further questions. I now hand the conference over to the management for closing comments.

Speaker #7: No, thank you very much for listening. I think the important part to note this quarter, besides the numbers, was that all the sectors of our business—upstream, downstream, Novelis, copper—did very well.

Satish Pai: No, thank you very much for listening. I think that the important part to note this quarter, besides the numbers, was that all the sectors of our business, upstream, downstream, Novelis, copper, did very well. I think the significant part for us was the strength of Novelis' performance in Q1, which I think is going to get better as we go forward this year. Overall, I think that Hindalco is poised for a good FY27. Thank you for your attention.

Speaker #7: And I think the significant part for us was the strength of Novelis' performance in Q1, which I think is going to get better as we go forward this year.

Speaker #7: So overall, I think that Hindalco is poised for a good FY27. Thank you for your attention.

Operator: Thank you. On behalf of Hindalco Industries Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

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