Hindalco Industries (NSE:HINDALCO) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the Earnings Conference Call of Hindalco Industries Second Quarter Results for FY 'twenty Please note that this conference is being recorded. I now hand the conference over to Mr. Subid Sain, Head of Investor Relations at Hindalco. Thank you, and over to you, sir. Good morning, and good evening, everyone. Thank you for joining us. On behalf of Hindalco Industries, I welcome you all to our Q2 FY 'twenty seven earnings call.

0:47 We will be referring to the Q2 investor presentation available on our website. Please note that certain statements made during this call may be forward looking and should be read in conjunction with the safe harbor statement on Slide two of the set presentation. The presentation highlights our consolidated performance for the quarter, along with our segment wise performance review of Novelis and our India Aluminum and Copper businesses. The corresponding segment information of prior periods have been restated accordingly for a comparative analysis wherever applicable. Joining us today from Hindalco are Mr. Satish Pai, Managing Director Mr. Bharat Goenka, Chief Financial Officer. From Novelis, we have Mr. Steve Fisher, President and CEO and Mr. Dev Ahuja, Chief Financial Officer.

1:35 Following the management's remarks, we'll open the floor for questions and answers. Post this call, an audio replay will also be available on company's website. With that, let me now hand over the call to Mr. Pai to take you through company's performance and key highlights of the second quarter of FY 'twenty seven. Yes. Hello, everyone. I would like to take this opportunity to wish everyone a happy and healthy festive season. Thank you for joining Hindalco's earnings conference 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. Let me 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.

2:23 Our LTIFR for this quarter stands at 0.16, showing significant improvement over the prior period. I'm also pleased to share that Aditya Alumina refinery was honored with the British Safety Council Award 2026, a testament to our unwavering commitment to occupational health and safety. We also launched an AI powered behavior based safety observation app in 22 plus regional languages to strengthen critical risk identification while developing 40 certified taproot experts to enhance incident investigation and root cause analysis across our businesses. At Hindalco, we continue to make strong progress on circularity and responsible waste management.

3:12 This quarter, 62 of the total waste generated was recycled or reused, impacted by the higher rainfall at certain plants and temporary logistical challenges. We achieved 93% recycling rates for bauxite residue, excluding Utkal, 77% recycling of ash and 110% recycling of copper slag this quarter. We have made consistent progress in improving water efficiency across our operations through a series of focused interventions. In our aluminum business, higher recycling rates of 33% were recorded in this quarter, up from 30% a year ago with increased rainwater harvesting across the sites that helped us reduce freshwater consumption on a year on year basis.

3:58 In our copper business as well, specific water consumption specific freshwater consumption improved year on year due to continued recycling and higher rainwater harvesting this quarter. Biodiversity conservation remains an integral part of our sustainability agenda. At the end of Q2 FY 'twenty seven, our cumulative tree plantation has crossed 6,800,000 trees with nearly 5.4 lakh saplings that were planted this quarter to strengthen greenbelt coverage and enhance local biodiversity across around our operations. We have implemented conservation programs for special status species across 10 high priority sites, reinforcing our commitment to biodiversity conservation and ecosystem protection.

4:46 We also commenced implementation of no net loss project at our Belgavi plant aimed at restoring 123 hectares of habitat and strengthening local biodiversity in the region. Renewable energy remains a key pillar of our decarbonization strategy. As of the end of Q2, we have six forty three megawatts of renewable energy capacity across solar, wind and hydel resources, along with 35 megawatts of pumped storage tie ups under our round the clock renewable energy program. By FY 'twenty seven exit, our renewable energy portfolio is set to reach eight eighty four megawatts, complemented by 125 megawatts of RERTC capacity, accelerating our transition to a cleaner and more sustainable energy mix and building a more sustainable and future ready Hindalco.

5:40 Our aluminum specific greenhouse gas footprint stood at 19.4 tons of CO2 per ton of aluminum in Q2, lower than the comparable period last year. Now let me give you a glimpse of the current broader economic environment on Slide 11. IMF projects global growth at 3.1% in 2026, slowing from 3.5% in 2025 as the global economy remains resilient but divergent in its performance. A significant drag is arising from the Middle East and Central Asia region, where growth is expected to contract by 0.3% in 2026 after expanding 3.7% a year earlier, reflecting the economic disruptions caused by the prolonged conflict and energy supply constraints.

6:31 The negative supply shock arising from the conflict and its impact on global economic activity has been partially offset by strong investments in artificial intelligence and the broader technology sector. The U. S. Economy is expected to grow by 2.3% in 2026, supported by resilient domestic demand and continued investment. While in China, it is projected to slow down to 4.5% from 5% amid weak domestic demand and ongoing structural challenges. Global growth remains vulnerable to escalating geopolitics, continued commodity price volatility, higher financial conditions and increasing trade fragmentation. Global inflation is projected to rise from 4.1% in 2025 to 4.7% in 2026, driven primarily by higher energy and food prices before easing begins again in 2027.

7:30 India continues to demonstrate resilience of its domestic economy despite a challenging global environment. The RBI focused GDP growth for FY 'twenty seven at 7.1% against 7.8% in FY 'twenty six. Recent high frequency indicators suggest that economic activity continues to maintain momentum. Manufacturing remains steady despite cost pressures, while the services sector continues to benefit from robust domestic and external demand. Investment activity continues to strengthen, aided by government infrastructure spending, improving private sector CapEx and strong credit growth. Rural consumption is expected to be supported by resilient non farm activity, although deficient monsoon conditions and strong El Nino effects pose risk to agricultural output and rural demand.

8:28 Urban demand remains healthy, backed by stable employment conditions. Meanwhile, external headwinds, including geopolitical tensions, elevated commodity prices, supply chain disruptions, tighter global financial conditions and trade related uncertainties continue to weigh on growth outlook. Inflation prospects have become less favorable with the CPI inflation projected at 5.2% in FY 'twenty seven, driven by food and fuel price pressures, deficit monsoon conditions, El Nino related risk and volatility in the global crude oil prices. With signs of inflation becoming more broad based, the RBI has raised the policy repo rate by 25 basis points to 5.5% and shifted its policy stance to calibrated tightening, signaling its focus on containing inflation while ensuring macroeconomic and financial stability.

9:29 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. Looking ahead, the global aluminum market is expected to remain in deficit through calendar year 'twenty six. Current estimates point to a deficit of around 800,000 tons, significantly higher than earlier expectations. Any further disruptions in The Middle East could tighten supply further and provide additional support to aluminum prices. While capacity restarts and new supply additions are expected to gradually rebalance the market, the medium term outlook remains constructive. Looking at the global aluminum market in Q3 calendar year 'twenty six, Chinese aluminum production grew about 3% year on year to nearly 11,000,000 tons, supported by capacity additions in Yunnan, partially offset by capacity rationalization in Shandong.

10:26 In the rest of the world, production declined 6% to around 8,000,000 tons, primarily due to disruptions stemming from the Middle East conflict and the closure of Mosul, partially offset by higher production in Indonesia. As a result, the global aluminum production stood at approximately 19,000,000 tons, down 1% year on year. On the demand side, aluminum consumption in China increased four percent to around 12,000,000 tons, supported by continued strength in new energy vehicles and healthy export demand for semi fabs and finished products. However, the construction sector remained weak amid ongoing challenges in the real estate market. Outside China, consumption declined 2% to around 7,000,000 tons, reflecting softer demand in Europe, Middle East and North America, partially offset by growth in India.

11:20 Overall, the global aluminum consumption reached approximately 19,000,000 tons, up 1% year on year. With demand continuing to outpace supply, global aluminum markets remained in deficit by roughly 500,000 tons this quarter. Turning to India, demand remains resilient and continues to be among the strongest growth markets globally. Aluminum demand in Q2 FY twenty twenty seven is estimated to be around 1,700,000 tons, representing growth of approximately 6% year on year. This growth is primarily driven by the automotive sector supported by healthy vehicle production and sustained demand across both passenger and commercial vehicles.

12:05 Overall, India continues to outperform most global market and remains one of the most attractive long term growth opportunities for aluminum demand. Turning to the Indian copper industry on Slide 14. In India, refined copper demand remained relatively subdued during the quarter, declining 3% year on year to three eighty eight Kt. While demand from building and construction and power sectors continued to grow, this was partially offset by softer demand from consumer durables and electrical equipment segment. On the copper concentrate side, Q2 FY 'twenty seven continued to witness extremely tight copper concentrate markets with spot TCRCs remaining at negative levels in the range of minus $0.48 to minus $0.58 per pound and concentrate availability remaining constraint.

12:57 The market continued to be affected by the structural gap between expanding global smelting capacity and constrained growth in mine supply. Coming to Slide 14, our consolidated business EBITDA was up 52% year on year at INR13869 crores this quarter, and the consolidated profit after tax was up 59% on a year on year basis at INR7534 crores. At India at Hindalco India business, our business segment EBITDA was up 66% year on year at INR 9,011 crore this quarter, whereas the quarterly profit after tax was at INR 5,852 crores, up 91% on a year on year basis this quarter.

13:45 On Slide 17, it's encouraging to see the earnings from our non LME linked business, namely Novelis, aluminum downstream copper continuing to grow, reaching INR6860 crores this quarter, with momentum continuing to accelerate. These businesses have a much lower correlation to LME price movements and are driven by factors such as value added products, recycling, innovation, customer relationships and operational performance. Our growth is increasingly being driven by three key factors that is recovery at Novelis, strong operational performance in our copper business and the continued expansion of our aluminum downstream portfolio into new products, applications and premiumization.

14:32 Coming to our business wise performance this quarter on Slide 17. The India upstream aluminum shipments were up 1% year on year and revenues were up 33% year on year. Our quarterly EBITDA stood at INR 7,009 crores, up 55% year on year, backed by favorable macros and our strong performance across the value chain. This delivered an EBITDA per ton of INR 2,125 this quarter. EBITDA margins were at 52% and continued to be among the best in the global industry. Our hedging position in aluminum for the rest of FY 'twenty seven stands at around 29% on the commodity at $3,000 per ton and 21% in the currency at INR93 per dollar.

15:19 Our Indian downstream aluminum business continues to deliver a strong core performance, while quarterly shipments were up 6% year on year at 119 Kt. Aluminum downstream delivered a quarterly EBITDA of INR329 crores, up 26% year on year this quarter versus INR261 crores in the prior period. This was driven by product mix and premiumization. The resulting EBITDA per ton stood at $289 per ton this quarter. Copper performed exceptionally well during this quarter, delivering another strong set of results. Overall, metal shipments were at 116 Kt, up 2% year on year, while CCR volumes were stable at 96 Kt. Quarterly copper EBITDA reached a record INR1673 crores, a significant 164% increase year on year, driven by strong operational performance, healthy domestic demand across segments despite elevated LME prices.

16:21 In addition, higher realization from sulfuric acid and other byproducts, along with certain onetime gains, further supported earnings during this quarter. Copper is expected to deliver underlying quarterly EBITDA of around INR 1,200 crores on a normalized basis, underscoring the strength and resilience of this business. Turning to cash flows and capital allocation in Slide 20. Our business continued to generate strong cash flows of INR 23,322 crores during the period, representing a robust 57% year on year increase. At the same time, we invested INR2719 crores in capital expenditure, up 83% year on year as we continue to advance our growth and capacity expansion projects.

17:11 These investments are focused on strengthening our competitive position and delivering long term value creation. Importantly, we continue to maintain a strong balance sheet with consolidated net debt to EBITDA at 1.8 as of September 2026, providing us flexibility to fund growth while maintaining a disciplined approach to capital allocation and shareholder returns. Now let me conclude today's presentation with some key takeaways. At Novelis, our second quarter performance once again reflected the strength and resilience of the underlying business. We have now normalized production at Oswego Hot Mill and through September 2026, cumulative insurance recoveries of $519,000,000 Importantly, our long term EBITDA per ton guidance of $600 remains unchanged.

18:03 We are confident that the strength of the business supported by cost restructuring will drive a return to positive free cash flow and mark the beginning of our deleveraging journey by the end of FY 'twenty seven. We also achieved a major milestone at Bay where our 600 Kt greenfield rolling and recycling facility produced its first cold rolled coil in September. Commercial shipments are expected to commence in the first quarter of FY twenty twenty eight. Bay Minet will further strengthen our operating footprint, expand our recycling capabilities and position Novelis for the next phase of long term profitable growth. Turning to our India business. We continue to deliver record breaking performance with industry leading profitability across both our aluminum and copper businesses.

18:53 This performance reflects the strength of our integrated business model, our relentless focus on operational excellence, disciplined cost management and consistent execution across market cycles. On the growth front, all our key upstream expansion projects are progressing well and remained aligned with our strategic ambition of doubling upstream capacity. These investments will further strengthen our integration and cost leadership, our goal of delivering fourfold increase in downstream EBITDA by FY 'thirty. A key aspect of our transformation is the growing contribution of non LME linked businesses as our portfolio increasingly shifts towards value added products recycling, innovation led solutions, stronger customer partnership and operational excellence.

19:41 Our earning profile is becoming more resilient and less correlated to movements in LME prices. We are also making steady progress on strengthening our resource security. As the Chakla Bandha and Minashi mines become operational, we will enhance raw material self sufficiency, lower production costs, support margin expansion and further strengthen the earnings profile of our upstream business. With over INR 50,000 crores of expansion projects currently under execution across our businesses in India and another INR 50,000 crores of growth opportunities under evaluation, we are preparing for the next phase of our growth journey. These investments of over INR 1 lakh crore in growth projects over the next five years reflect our confidence in India's long term demand outlook and reaffirm our commitment to creating sustainable value.

20:33 Overall, Hindalco is exceptionally well positioned for the future, backed by our integrated business model, strong resource base, disciplined capital allocation and strategic investments across the value chain. We are well equipped to capitalize on emerging growth opportunities. We remain committed to our purpose of engineering better futures while delivering sustainable growth, enhanced profitability and long term value creation for our stakeholders. Thank you very much for your attention, and the forum is now open for questions. Thank you very much. We will now begin the question and answer session. First question is from the line of Tanakhin from HSBC.

21:40 Tanakhin, please go ahead with your question. Your line is unmuted. Yes. Thank you very much for the opportunity. Can you still give us some clarity on when do you expect to have detailed time lines on the INR 50,000 crores of expansions that are being evaluated in the India business? Yes. Pinakin, I think that our focus right now is to get the first set of projects completed. So just so that we can recap, the copper recycling plant in Pakajan commissions in December of this year. And then starting from the alumina plant that in Aditya refinery commissions in December of 'twenty seven.

22:34 The one 180 Aditya first line commissions in December of 'twenty seven. So these three big projects are our focus. And then the next Aditya line will commission in December of 'twenty eight and the copper smelter will commission in December of 'twenty eight. So this is in that first INR 50,000 crores. Once we are doing this from we will then start for Mahan. The Mahan expansion, we are now going through the EC and trying to get the licensing and all sorted out. So that will be the next big project. And then, of course, we have downstream further copper recycling expansion from 50 Kt to 150 Kt. So it will be fair to say that every year and a half, we will be starting one more project. What we are trying to do, Pinakin, is to stay on the consolidated net debt to EBITDA at about the two lines that we have committed to you. So as we go along, we will give you as some of these new projects get approved for execution.

23:47 Sure. Got it. So in copper smelting, you highlighted the acid, some onetime pain. Absolutely. Would like to understand again that your voice is breaking. Can you come in a good reception area? Yeah. Just some Please, still unable to hear you, mister Panagin. Yes. Yes. I would request that you please check your connection and call follow back in queue. We'll go on to the next question, which is from the line of Sumangal Nevatia from Kotak Securities. My first question is on the cost, if you could guide us how are costs moving for the Aluminum division in the coming quarters?

24:35 And what are the time lines for the captive coal mine commissioning both Chakla and Vanda? Is it on track for end of FY 'twenty seven? And on the copper division, I missed, you mentioned something that INR 1,200 crores is a sustainable run rate for copper. Can you just elaborate on that? What has changed in terms of quarterly EBITDA run rate? One, of course, is Sulphur, but some elaboration will help. All right. Let me remember all your questions, Sumanda. So starting with the cost. So Q2 costs were up roughly 5% above Q1. So the cost up was two main factors, coal and CPCO.

25:20 The coal, it's a monsoon quarter, and we got badly impacted in the northern region. So it was basically Renusagar, Renukoot and Mahan because the rainfall was very heavy and the demand for the northern power plants was very strong. So we had a low linkage materialization and had to buy a lot of coal on the spot auctions. So on the Odisha side, we didn't have an impact. So long story short, that led to a 5% increase in the cost of production of aluminum Q2 to Q1. We expect Q3 to Q2 to also be around that 5% because the northern area, the coal is still not stabilized. So October continued to be very hot. We are slowly at mid at November starting to see some signs of improvement. So I think Q3 to Q2 will also be 5% up. And in Q4, we will start to see the price go down as the coal prices and coal availability improve in Q4.

26:22 Now, of course, as your second question is what is important for us is to get Chakla and Vanda started so that by next monsoon, we are not under this pressure. So Panda, the box cut has already happened. It's a high stripping ratio. So first coal should start to come out towards the second half of the next financial year. Chakla, we are expecting still that we will be getting coal by sometime middle of next year. Then on copper, you heard right, we think that it's about twelve hundred to thirteen hundred dollars in the next coming quarters, largely driven by sulfuric acid pricing, along with precious metal sales. And of course, I think that the copper downstream products pricing is also helping.

27:10 Understood. Sir, if you can just elaborate what is the proportion of sulfuric acid realization, say, in a normalized year like FY 'twenty five, 'twenty six versus what is it today? Right now, I think we are running at roughly INR 16,000 a ton. Last year, at the same quarter, it was around INR 7,000 a ton. Let me tell you, even INR 7,000 is quite high. So we would normally if you go before that, it used to be around INR 3,000 or 4,000 a ton. So sulfuric acids and sulfur prices are really high right now. Okay. And in terms of contribution to our EBITDA, what is the proportion? I what is the volume that we kind of produce and sell? So I think contribution, let's say that it's like 50% comes from other stuff, 50% comes from copper, more or less.

28:03 Volumes of sulfuric acid is 300,000 tons a year. A month. Month, sorry. A quarter. 300,000 tons a quarter. Sorry. Understood. Understood. I have just one more question on Novelis. Now given that we are seeing so many moving parts with respect to tariffs and Oswego and recoveries of insurance, Overall, the predictability of earnings and margins have really gone down for us. Is it possible now since we are going back to normalized level, at least for, say, FY 'twenty eight, give us some guidance on volumes and some range of margin that we are expecting given the current tariffs and current scrap spreads? Yes. So, Mangal, I'll take this one. So I don't know why you were saying there are so many moving parts because we have been pretty clear to say that right now, we have some headwinds from tariffs, but we are working with a clear plan.

29:03 And by fourth quarter, would come down to a fairly marginal level. So that's swing factor number one, right? So we are giving you predictability, to be clear. Number two, Oswego fire impact. We are saying that Oswego fire impact on the Yonjoo strike impact. On the Yonjoo strike impact, we have told you that we have a 20,000,000 impact in Q2. And you can broadly expect a similar impact in Q3. And after that, it's over. So that's swing factor number two for you, right? Then the third thing is insurance recoveries. Now insurance recoveries, you expect that we have another $47,000,000 of insurance recoveries that will fall into EBITDA, and that should pretty much be by this fiscal year end.

29:51 I don't know what else is in your mind a swing factor, but we have clearly called out these factors. Having said that, we will gain as the supply chains normalize. So I'm telling you one more thing now, which is actually on the positive side, that right now, we are still facing some impact of our customer supply chains not having normalized, which are putting some kind of some negative color on shipments for the time being. But that is in the course of normalization and the shipments momentum based on the underlying market should pick up pretty well starting from Q4 of this fiscal. So I think that we have sliced and diced all the factors for you, and I hope that, that should help. Got it. That's helpful. Thanks and all the best.

30:39 Thank you. Thank you. Next question is from the line of from Nomura. Please go ahead. Yeah. Hi. Thank you for the opportunity. Happy to be in advance, sir. My first question is regarding your hedging. How's your hedging position? And also, if you can get some sense on the regional premium and how do you see them in the near future? My first question will be largely on this. Yes. So the second, let's say, H2 of FY 'twenty seven, the remaining six months, we are hedged 29% at $3,000 per ton. And if we now go into FY 'twenty eight, we are about 26% hedged at 3,168.

31:30 So, that's our position. Now, MJP had spiked up. I think the MJP is correcting. I think Q3 MJP is already about $270 ish. And I think that we expect MJP to be in that $200 to $50 range in Q4. Thank you, sir. My next question would be largely on the pottery lining capitalization. So any rough estimate how much it would have added to the EBITDA per ton? And also the India business depreciation seems to have increased significantly. So is this just this quarter? Or should we start building higher depreciation going forward? No, it's the impact of the pot tree lining. So basically, what we have done is we have capitalized the pottery lining, which is more or less, we were the only company in the aluminum business not doing it. All our competitors do it. So the impact roughly adds about INR 130 crores to the EBITDA line, and it adds INR130 crores to the depreciation line.

32:40 So that's why you're seeing the depreciation a little bit up and the positive impact in the EBITDA line is INR130 crores. So you will see this now going forward. In Q2, there was a little bit more additional catch up of the Q1 as well, which is why the number was slightly higher. But on an ongoing basis now, you are seeing probably INR130 crores additional due to the quaterilining being amortized and the depreciation correspondingly going up by the same amount. Understood, sir. Sir, and just one last question. In the presentation, last quarter, I believe you were showing or estimating close to 1,000,000 ton of deficit. Now it has, I think, come down to 800,000 tons. So how are you seeing LME prices over the next year?

33:30 And just one bookkeeping question, what will be your run rate of CapEx over the next couple of years? Next couple of years, no. I think this so let me first start with your first question was on the LME prediction. So look, 810,000, it will be this is a call that's being made in the last few months. It really depends on I would not read too much into the difference, but next year is an interesting one. So if the Middle East supplies get normalized and if the expected Indonesian volumes come, and there's a big if in that, that 1,500,000 tons additional will come or not, then the LME week, the consensus was, in some ways, the LME next year could be between 2,600 and 2,800.

34:19 So that's the next year's outlook. Difficult to say because one geopolitical event, as you know, changes that whole scenario very quickly. What was the second question? Sir, it was your CapEx. CapEx yes, this year will be around INR 12,000 crores. Next year will be substantially higher, which I'll give you the number in the February board when we have done our budgeting. But next year will be high and the year after will be at the same levels. Because of all these projects that I mentioned to you, the sort of CapEx outlook in outflow in FY 'twenty eight, 'twenty nine will be quite high. Understood, sir. So it's fair to say that by next year, you will hit your peak net debt?

35:08 And just one last, if I can squeeze. For your smelters, upcoming smelters, what for your internal stake collection, what sort of LME prices are you building in for IRR? I think we took $26.50 or... Yes. About 2,600, we took. Understood, sir. And you will see peak net debt by next year, right? Sorry, peak? Net debt or peak debt. No. See, consolidated net debt to EBITDA, let's just stick with our commitment that we will keep the console at around two. Now what's going to happen is that Novelis in Q4, we have said, will reach about four. And then over the next two years, they're going to go through a deleveraging cycle, ending up between 2.5 to 2.8 is the plan.

35:58 The India, which is now negative, once we get into our growth CapEx, it won't remain negative. It will become one, 1.5. But the consol then for us, what we are trying to do is to keep it at what we committed, which is around two. Understood, sir. Thank you so much. I'll join back with you. Yes. Thank you. Thank you. Next question is from the line of Pallava Agarwal from Antik Stock Broking. Please go ahead. Yeah. Good evening, sir. So the first question was, could you quantify the one off in the copper segment? Is it Is it correct to assume that out of from INR 1,600 crores, if we assume that INR 1,200 crores is a normal one, so this quarter is a 400 crores of one off? So there is it's not a single one off. There were a couple of things that happened. We had a certain amount of copper slag sales where we our accruals and what we realized by selling was higher. There's a certain amount of derivative noise. There's a certain amount of precious metals, sales. So all that put together, there was about roughly $350,000,000 to 400,000,000 what we think was not on a sustainable basis repeatable.

37:09 Sure, sir. Also, if I look at the aluminum upstream EBITDA on a sequential basis, given the fall in the LME and the 5% increase in costs, probably the EBITDA decline could have been higher. So is there did we get the benefit of some higher premium? Or to what led to the better than expected performance over there? We got higher premium. So we realized a higher net premium, one, because of the exports that we were doing, which went to high premium countries, not NGAP. And the second is the value added upstream parts, which is the conductor cables and things, we got a better pricing on it. So the VAP and the premiums resulted in the EBITDA per ton being higher.

38:01 Sure, sir. Also in terms of the copper pricing, so you said concentrate availability is tight, which is reflecting in the low TCRC or negative TCRC. But the inventories on the London Metal Exchange don't seem to be declining to that extent. So, you know, where's the disconnect between the two? The London Metal Exchange, you're talking about the copper inventories. People, especially in The U. S. And all, have been holding copper because they are worried about so I think that for us, let me be one thing is clear, the copper concentrate availability is tight. But for people like us, we are now very comfortable because we have got large miners with which we have long term contracts. So we have no problem in getting the concentrate.

38:46 But the overall supply demand because of the huge Chinese smelting capacity, TCRCs are negative. Next question is from the line of Indrajeet Agarwal from CLSA. Please go ahead. Hi, sir. A few questions. First on copper EBITDA, as you mentioned, 1,200 crores quarterly dividend rate, What kind of sulphuric acid price are you taking in that? So we are taking a high sulphuric acid, Indrajit. I mean, there's somewhere between INR 14,000 crores, 15,000 crores. I think we are seeing that in Q3 and Q4. So we are taking it at these higher levels.

39:33 Sure. Makes sense. Second, on you mentioned about 2,600 to 2,800 LME. Just to understand where do you think is the ninetieth percentile cost curve today is? And what is the kind of cash cost Indonesian capacities could have? The Indonesian we are not really clear, but the average of these are let's take the first the higher side of the cash cost, sir, is roughly around $2,000 to $200 per ton. Sure. That helps. Thirdly, on the consol CapEx with Novelis tapering off, consol CapEx may not rise next year. Is that understanding correct? Even though India rises, but... Yes, that's fair point. Because this year, the Novelis CapEx is very high. Next year, it will go back to normal maintenance plus project around $500,000,000 $600,000,000 levels. So yes, the console CapEx may not go up that much. You're right.

40:30 Sure. And lastly, on the relining EBITDA adjustment at aluminum of INR 130 crore, the quarterly run rate, is this the first quarter we have done? So sequentially, EBITDA improvement looks better optically than what the underlying number is? Is that... I think we had to restate or we I'm did just checking. No. So you're right. It looks better because this is the first quarter we did it. Of INR130 crores. All right. That's all from my side. Thank you and happy to that. Thank you. Thank you. Next question is from the line of Satyadeep Jain from Ambit Capital. Please go ahead. Hi. Thank you. Mister Pai, just... I know just one more question on the LME Yeah. Expectations.

41:17 I know LME become a lot of people expect LME to go down on higher supplies. Now Yeah. When you strategize, would you... I know you have a hedging strategy. You like to keep something open. But if generally the expectation is prices go down, would you like to hedge more? And would Mahan three seventy... Would you still want to go ahead if we see more capacity and prices come down, the three seventy that you have on board, which you're evaluating? Yes. I think that look, Satish, fundamentally, these things you have to take a ten, fifteen, twenty year view. We think that aluminum demand, let's take India, is going to grow at 7% to 8%, which is fairly conservative. The second thing is that general aluminum demand worldwide is growing at 3%.

42:06 It's also very clear that nobody in the Western world is adding any smelting capacity. So the only places left is India and Indonesia. So and then if you go and look at our cost curve, Sattigit, once we are Chakla, Banda and Meenakshi running, we have locked in, except CP coke, our cost curve at very attractive levels. So we will LMEs can swing up and down, but we will be the last man standing. So yes, we think that taking advantage of the backward integration of bauxite and coal is the reason why we should do the investment. There can be some years where it goes down, but the fundamental demand of aluminum, we think the long term trend is good. In the downstream optionality after you reach this 2,000,000 ton between Aditya and Mahan, how much optionality would be there beyond this?

42:59 So look, in the downstream now, we still have the capability to add another cold mill in Aditya, which is another 170 Kt. So on top of 600, we can add 170 of rolling capacity. And then on the extrusions, we are already looking at in Kupam and Silvasa with the auto demand and the consumer electronics. So if we get to 2,000,000 tonnes of aluminum, we will get to about 1,000,000 tonnes of downstream capacity in India. In the downstream optionality after this, after 2,000,000 tonne on the sorry, after 2,000,000 tonne for the upstream, what optionality you have between No, no. Oh, you're talking about upstream optionality or downstream?

43:47 Upstream. Upstream. See, upstream, we can easily add another three sixty Kt in Mahan. We have checked, we have the land. So Aditya land, we put the rolling mill, so we don't have any more land in Aditya after this $3.60 expansion. But in Mahan, we can do another $7.20 Kt expansion. Okay. Just one more question on this bookkeeping. Of the INR 50,000 crore that you have in India, how much have you already spent? And what was the royalty payment? I know Novelis, I think, was about $11,000,000 Overall, the Hindalco level, what was the royalty payment? And out of 50,000 crores, how much has been spent so far? 11,000,000 crores. Hindalco was also the same level, 11,000,000 crores. Because we pay on a quarterly basis till we hit the cap of INR $2.25 crores.

44:41 That's how the royalty thing has been set up. And of the CapEx of INR 50,000, we were calculating, I think we have probably spent about INR 20,000 crores at the end of this financial year. Thank you so much. Thank you. Next question is from the line of Ashish Jain from Macquarie. Please go ahead. Sir, my first question is on the aluminum EBITDA for this quarter. Is it possible to give a breakup in terms of how much is sulphuric acid lead and how much is pure copper and copper downstream? You're talking about the copper EBITDA, not aluminum EBITDA? Yes. No, no, sorry, my bad, copper EBITDA.

45:28 Yes. No, I don't think we want to give you a breakup there. I think it's fair to say that we have given you that the underlying run rate on a going basis is around 1,200 to 1,300. Just to confirm that, did you say earlier in the call that 50% of EBITDA this quarter was copper lead in did I hear you right on that? Yes, more or less. See, we get money from the so copper is sold, we don't sell too much cathodes. So we convert it to rods and then we convert it to other downstream things. So when I look at the premiums on all of that and put it here, roughly 40%, 50% will come from copper products, the rest will come from sulfuric acid, precious metals, etcetera.

46:17 Sir, this is in spite of TCRC being where it is. That is why I was... That's why if I was selling cathodes, I would be losing money. Got it. Got it. Sir, secondly, in terms of the cost curve, like for 2Q sorry, for 3Q and 4Q, what is the outlook on other cost coal you explained, but what is the outlook on the other cost drivers from aluminum business point of view? It's only CP coke. All the rest, we don't expect too much variation from the current levels. Actually, caustic prices are But CP coke is also... Yes. CP coke, which is CP what coke is also trending higher. These are the two that are high, but CP coke, we don't expect that it's going to go up a lot more than current levels. It's already high.

47:06 The coal is the one that needs to come down. So that's got a nearly 40% impact on the cost curve. Yes. Thank you. Thank you. Next question is from the line of Raji from Citigroup. Please go ahead. Thank you. I don't know if I missed this, but did you indicate the alumina sales in the quarter, expectations going forward? Yes. The alumina sales, we sold 194 in Q2. And in Q3, we should sell in the similar range, 190 to 200. 190 to 200. Got it. And on the capital expenditure, how much do you spend in India in the first half?

47:53 About INR 6,000 crores. And this year, I think our expectation is we would spend about INR 12,000 crores by the end of the year, 12,000, INR 13,000. Got it. And what did you mention? You said that India has a net cash balance. How much was that? INR 16,000 crores. We are sitting with treasury of INR 16,000. Net cash is INR 9,000 crores. Yes. Because we have long term loans of about INR 6 crores, 7,000 crores. This is only India books? That's only the India. That's why net debt to EBITDA is minus INR 0.35 in India. Thank you. Next question is from the line of Ritesh Shah from Investec.

48:48 Please go ahead. Hi, sir. Thanks for the opportunity. Sir, you did indicate a broad outlook on aluminum. Can you please help us with your thoughts on alumina as well? So alumina, the only good news is the alumina index is starting to trend slightly up. It had been low for the last two quarters. Currently, it's running above $350 So we expect that it should be firmer, closer to $400 next year. And sir, what will be the underlying variables which will drive that? It's see, when the Middle East capacity went off, that's when the alumina demand went down because the third party alumina market is largely driven by people who are not integrated, which is the Middle East smelters because everyone else and China, everyone else is more or less backward integrated.

49:41 Sure. Sir, second is you indicated with respect to the aluminum EBITDA bump this quarter, you attributed it to higher premium and higher value added products. Is it possible to give some color on how is it on spot basis? How do you see this on Q3 basis? And is this something which is sustainable? I mean the value added products are, of course, sustainable. So that will happen. But the premium may not be because MGP has already come down in Q3. So we had managed to get quite a good premium on the export side in Q2. In Q3, already the MGP is down by more than $100 The percentage of VAP should continue.

50:28 Sure. And sir, last question, you did indicate on the incremental projects, we'll take one new project every one point five years. Just wanted to understand, say, hypothetically, if we go ahead with the Mohan three seventy Kt first, it would be contingent to both the variables on the projects which are due for commissioning into 'twenty seven and 'twenty eight? Is it we are looking at a particular utilization level? Or is it more contingent to the balance sheet? It's actually an execution capability and the balance sheet because we are working with one large EPC contractor partner. So really, I would like to use the crew that's finishing Aditya to go and do Mahal. So we have to phase it because the capacity to execute large projects is quite limited in the country right now.

51:19 So we have to be careful. So execution capability and the balance sheet, both are the two things. Utilization, no. I mean, if you produce the aluminum, the market is there. Perfect. This is quite helpful. Thank you so much. All the very best. Yes. Thank you. Thank you. Next question is from the line of Rajul Gupta from Morgan Stanley. Please go ahead. Two questions. First, downstream EBITDA per ton has been largely stable over the past couple of quarters. How should we look at in the second half? That's my first question. Yes, it should start to go up because we are qualifying quite a few products in Aditya FRP right now. So as and it's Aditya FRP is now at the 50% loading level. So in the next two quarters, we would like to get many products under qualification, battery foil, the ULG foil, the can body stock. So as those volumes pick up, the EBITDA per ton should cross 300.

52:31 Got it. My second question is slightly longer term. When you talked about the newer upstream projects that you have been undertaking is on the back of estimate of 2,600 LME prices. Can you help us understand with all the backward integration and also moving downstream, what kind of IRRs are you thinking about at 2,000 INR2600 crores LME prices? At least sort of teens at that INR2600 crores because there is a certain amount of inflation in CapEx and cost of execution as well. So at INR2600 crores, we are we want to be at least in the teens. Got it. So just a follow-up. When you talk about around 1,000,000,000,000 of CapEx over the next few years, that does take into account the inflation over the next few years, right? Yes, yes, yes.

53:42 Next question is from the line of Jashandeep Singh Chadda from Nomura. Sir, around 50% of the copper EBITDA came from, you know, non copper. So can you give us a similar number for less than last quarter? And on on an average run rate, how much is it? See, look, last quarter was at similar I mean, you will have to go down to when TCRCs were if I go last year, the picture changes because TCRCs were 15 to 17. So then the contribution from the copper side will go up. But it's fair to say that the copper value chain is fairly diverse.

54:29 So you do get a little bit of one goes up, the other goes down and sort of balances out. So you can't really average it over the last five years and say where it has been. Understood, sir. And sir, the next question is on alumina strategy. I see that... And it it might be in the last quarter, but, you know, you have terminated that. So does that change your specialty alumina strategy or the foreign downstream target? And how should we look at that? Not at all because we are we just commissioned the PPT hydrate plant, which the technology was fully indigenously developed. Of course, it took us five years to do that. We were hoping with AluChem for the tabular alumina, we would shortcut that. But so we are, A, we are out looking for other people who can help us fast track that and B, we have our internal program to develop tabular alumina.

55:24 We are, of course, going to launch the white fused alumina project very soon. So our plan to get to about 1,000,000 tons of specialty alumina is not changed. Understood, sir. And sir, just one last thing. I believe you answered this, but I... You know, earlier, but I would like to ask you in separate thing. So most of, you know, Hindalco and your peers are putting up capacity, and you were saying that even for, there is a lot of demand, so utilization is not an issue. So if you can, you know, just maybe tell the demand drivers in the domestic market, which sector which, you know, reason you are looking the mainly demand coming from it for aluminum over the next couple of years, that would be great. Yes, that's a good question. It requires a more detailed answer, but I'll just give you a highlight.

56:19 Historically, the electrical sector, which is conductors and cable, were nearly 40% of the aluminum demand. We are now starting to see auto sector becoming significant. We are starting to see packaging sector become significant. We are starting to see industrial and home appliances becoming significant. So it's as this Indian economy grows and urbanization come in, and now by the way, data centers is starting to become significant. So all these other drivers are starting to come in. So it's fairly how should I put it, Indian demand is now starting to replicate Japanese or European or U. S. Demand in memory base. For many years before, it was very much concentrated on the conductor cable market, which is nearly 40% of our aluminum.

57:08 Now it is much more broad based. Understood, sir. And I'll get in touch with you often also to get details further. But if you have to put a number, let's say, number for next five years, what will be the CAGR that you will be building for demand? We normally work with the I always say, it can go up and down. India grows at roughly 7% CAGR. So that's the number we use. You. Ladies and gentlemen, we take that as the last question for today. For any further questions, please connect to Hindalco IR team. I now hand the conference over to Mr. Pai for closing comments. Yes. Thank you very much. So another good quarter. And I think for me, the upstream business did well. But in the coming quarters going ahead, we believe the recovery of Novelis, the ongoing strengthening in the copper business and the aluminum downstream are going to be important.

58:11 So overall, the strength of Hindalco is in its diversified business model with at least four pillars driving the growth. So thank you very much for your attention, and happy Danteras and happy Diwali to all of you. Thank you. Ladies and gentlemen, on behalf of Hindalco Industries, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.