Nava Ltd Management Discussions

Company Overview

Nava is a leading manufacturer of Ferro Alloys in India and got diversified, over the last 50 years, into the businesses of Energy, Mining, Agribusiness and O&M Services. The group has operations spread across South-East Asia and Africa.

Group Strengths:

• 175,000 TPA Ferro Alloy production capacity

• 734 MW of power generation capacity

• Mining expertise through Zambias largest coal concession

• High yield Avocado business in Zambia

• Backward integration into manganese ore mining

• High productivity in all the operational spheres

Indian and Global Operations on Map

Our strategic objective is to build a sustainable organization that helps our customers and remain relevant to their needs while creating growth opportunities for our employees, generating profitable growth for our investors and contributing to the communities that we operate in. There are numerous risks and challenges affecting our business which are discussed in this report.

The objective of this report is to convey with the Companys shareholders about the Managements perspective on the external environment affecting the businesses of the Company, as well as strategy, operating and financial performance, material developments, risks and opportunities and internal control systems and their adequacy. These discussions and analysis shall be read in conjunction with the Companys standalone and consolidated financial statements (financial statements), the Directors report and other information included elsewhere in the Annual Report.

Global Economic Overview and Outlook:

The global economy displayed a resilient performance in 2023 after a turbulent year of geopolitical events, high inflation, reduced investments etc. Despite ongoing geopolitical conflicts, increased volatility in energy and commodity markets, and aggressive monetary tightening to combat inflation, global economy grew steadily, defying warnings of stagflation and global recession. Global growth estimated at 3.2% in 2023 is projected to continue at 3.2% in 2024 as per International Monetary Fund (IMF) - World Economic Outlook report published in April 2023.

Economic growth in several emerging markets and developing economies has surpassed expectations in 2023. Another silver lining is the strongest recovery of the US economy among major economies, marked by a stronger performance in private consumption. The GDP growth of the US increased from 1.9% in 2022 to 2.5% in 2023. Prolonged Russia- Ukraine war, higher interest rates and the tight monetary policy coupled with higher energy costs had slowed down growth in European Union. Chinas economy expanded by 5.2% in 2023 from 3.0% in 2022.

Global inflation continues to recede at a faster pace from 8.7% in 2022 to 6.8% in 2023 and further expected to fall to 5.9% in 2024 with advanced economies returning to their inflation targets sooner than emerging market and developing economies.

Risks to the global outlook are now broadly balanced. On the downside, new price spikes stemming from geopolitical tensions, including those from the war in Ukraine and the conflict in Gaza and Israel, could, along with persistent core inflation where labor markets are still tight, raise interest rate expectations and reduce asset prices. Amid high government debt in many economies, a disruptive turn to tax hikes and spending cuts could weaken activity, erode confidence and sap support for reform and spending to reduce risks from climate change.

The Reserve Bank of India projects global growth to remain steady in 2024. The region wise growth projections projected by IMF are:

	2023	2024	2025
	Actual	Projections	Projections
World output	3.2	3.2	3.2
Advanced Economies	1.6	1.7	1.8
Emerging markets	4.3	4.2	4.2
India	7.8	6.8	6.5

Latest projections are for the global economy to continue growing at a similar pace as in 2023 during 2024-25 and for global headline and core inflation to decline steadily. The global economic outlook for 2024 faces the risk of persistence of elevated interest rates and core inflation, withdrawal of fiscal support amid high debt weighing on economic activity, and economic uncertainties. Furthermore, heightened geopolitical tensions could pose downside risks to the global economy through tightening of energy and commodity prices. However, with faster disinflation and steady growth, the possibility of a severe economic downturn has diminished, and risks to global economic expansion are broadly balanced. Other positive factors, such as stronger-than-expected economic performance of the US and several large emerging market and developing economies, economic stimulus in China, the resilience of Europe amid the ongoing war and the easing of supply chain bottlenecks will bolster the outlook of the global economy. After rapid expansion in 2023, the Asia-Pacific (APAC) region is expected to be the fastest-growing region of the world economy in 2024, supported by robust domestic demand in East Asia and India.

(Source: IMF Economic Outlook, April 2024; RBI MPC Meeting 2024).

Indian Economic overview and outlook:

Amid a challenging global economic landscape and deteriorating geopolitical conditions, India has been a bright spot. It is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. Its GDP growth remained buoyant at 7.6% in FY 2023-24 as against 7% in FY 2022-23, supported by robust domestic demand, moderate inflation, a stable interest rate environment and Governments continued emphasis on capital expenditure.

The Countrys attractiveness as an investment destination remains robust, given the size and scale of operations it offers to global companies, abundant skilled talent pool, and prowess in technology and innovation. Various Production Linked Incentive (PLI) schemes have revived the manufacturing sector post pandemic. They are helping build up critical value chains and industrial clusters, cutting dependence on imports besides expanding the Countrys export basket.

The Governments thrust on infrastructure investments and emphasis on expanding the share of manufacturing in the GDP were seen to have supported GDP growth in FY 2023-24. The Index of Industrial Production (IIP) growth rate for FY 2023-24 indicates a 5.8% increase compared to the previous year. It is expected that structural interventions implemented by the government will continue to strengthen the infrastructural and manufacturing base, create economies of scale, increase exports and make India an integral part of the global value chain.

Indias economic outlook remains positive as it derives the benefits of demographic dividend, a skilled and productive workforce, infrastructure enhancements, increased capital expenditure, and the governments proactive policy measures. According to the IMF, the Indian economy is expected to advance steadily at 6.8% in 2024 and 6.5% in 2025 while RBIs forecast is more optimistic, projecting a higher GDP growth of 7.0% for FY 2024-25, while CPI inflation is expected to decline to 4.5% in FY 2024-25.

Potential risks to Indias economic outlook arise from headwinds from geopolitical tensions, volatility in international financial markets. However, Indias advantageous geopolitical position will help it capitalize on supply chain diversification and reshoring, increase its global competitiveness and boost exports. Further the formation of a coalition government at Center may have some impediments in pushing few structural reforms.

Ferro Alloys Industry Scenario:

The weak economic growth in European Union coupled with higher inflation and the ongoing conflicts of Russia- Ukraine, Israel - Hamas have reduced the demand for iron and steel products in the developed countries putting pressure on Ferro Alloys industry. Silico Manganese Alloys being the major alloy used had seen the negative realizations for most part of the year.

Putting aside short-term hinderances, the global ferro alloys market valued at US$ 152 billion in 2021 is estimated to grow at a CAGR of 5.9% during 2022 to 2031 reaching value of US$ 266.1 billion according to Transparency Market Research.

The demand for ferro alloys is anticipated to grow significantly due to rising steel output throughout the forecast period. Ferro alloys are essential raw materials for the steel and iron sectors. The developing automotive and transportation sectors are expected to propel ferro alloy demand globally. Their global market is being driven by advancements in technology as well as the expanding usage in the automotive, transportation, and aerospace sectors. Factors such as population growth, increased demand for infrastructure and manufacturing facilities, growing urbanisation are driving the demand for steel industry which in turn increased the consumption of Ferro Alloys.

Steel industry has been impacted by high inflation and interest rate environment in addition to growing geo-economic disturbances. The slowdown of steel consuming sectors, especially in EU & US continued in 2023 as investment and consumption weakened. The delayed effect of tightening monetary policy may allow slow recovery in 2024 in advanced economies while emerging economies, particularly Asia may grow faster.

Production and consumption of steel in India (in Mn Tons)

Category	2019-20	2020-21	2021-22	2022-23	2023-24*
Crude Production	109.14	103.54	120.29	127.20	144.04
Finished Steel Production	102.62	96.20	113.60	123.20	138.83
Consumption	100.17	94.89	105.75	119.89	136.25

Source: Joint Plant Committee, *Provisional

The stringent environmental regulations, carbon neutrality and industry standards imposed by regulatory bodies on the iron and steel manufacturing may impede the expected high growth unless large investments happen towards green steel solutions.

The Indian ferro alloys market has been steadily expanding and is around 12 Million MT, with the demand for silico manganese outstripping ferro manganese. Ferro alloys consumption in India increased marginally during FY 2023, compared to FY 2022 owing to increased steel production. Production-linked incentive scheme for specialty steel being implemented by Government of India will boost the demand for Ferro Alloys.

Major Challenges Confronting Ferro Alloy Sector:

With the continuing geopolitical conflicts and higher inflation, the export demand for Steel and Ferro Alloys has been a major challenge for the last 12-18 months bringing down the realizations substantially.

Volatility in raw material prices, increase in energy prices y-o-y by State utilities have made the power-intensive ferro alloys producers become uncompetitive. In case of producers with captive thermal generation, the coal costs were on the rise causing upward pressure on the cost of production.

Indian Ferro Alloys industry faces the challenges of availability of Manganese ore domestically and need to depend on imports which have become persistent challenges. Further the recent hike of Manganese ore prices by Indian Mining Companies and disruption of supply chain caused by cyclone to large Manganese ore mines in Australia have spurt the Manganese ore prices drastically.

Imposition of the stringent environmental regulations and carbon neutrality being proposed by the governments may increase the cost of investments and production.

POWER SECTOR Industry Scenario:

Despite the weak manufacturing activity across the world especially China and geopolitical conflicts, the worlds electricity demand remained resilient in 2023 with a growth of 2.2%. Global power demand is expected to grow by 3-4% per year due to growth in emerging market energy needs, increased electrification in developing countries, electrification of the transport and the increased standards of living in developing countries. Further new areas of power incentive data centres, artificial intelligence (AI) etc could further push up power consumption.

Share of renewable energy is being increased y-o-y in the global power generation mix with the push from governments and industry to battle the global carbon emissions and the climate change.

The rise in renewables share is to be supported by the expansion of ever-cheaper solar PV and rising nuclear generation.

India is the third largest producer of electricity globally, with installed generation capacity of nearly 442 GW as on March 31, 2024. In India, over the last decade, the emphasis of investments has shifted to renewable energy in view of national as well as international goals for combating climate change.

Power generation in India witnessed a growth of 7.0% for FY 2023-24 from all sources with the increased demand emanating mainly from the manufacturing activity and urbanization.

Despite a growing focus on renewable energy, thermal power continues to act as the bedrock for serving Indias energy needs. It is crucial for meeting base load requirements and providing the balancing energy output to help mitigate the inherently intermittent nature of renewable energy, which is accentuated further due to its quickly growing penetration.

FY 2023-24 being election year and with the increased demand from industrial activity, many State Utilities had floated short-term tenders for procuring power at higher tariffs. In parallel, the government pushed the coal mining and ensured sufficient supplies to all the power stations this averting energy crisis and high electricity prices over the power exchanges.

The push in the renewable energy space is gathering momentum, especially in solar power in line with the governments target of achieving 500 GW of installed capacity from non-fossil fuel sources by 2030. Govt of India had recently launched "PM-Surya Ghar" for installing rooftop solar installations aiming for 300 units of free electricity per month to one crore households.

Regulatory and policy reforms in the sector are critical to help avert the issues surrounding the power value chain alongside creating an enabling environment for increased investments in the sector. Some of the key transformative steps taken in the recent past are:

• Transmission plan for integration of over 500 GW of non-fossil fuel capacity by 2030

• Development of stalled hydro-electric projects in Arunachal Pradesh

• Revamped distribution sector scheme to help Discoms improve their operational efficiencies and financial sustainability

• National smart grid mission

• Unnat Jyoti by Affordable LEDs for All (UJALA)

• Street Lightning National Program

• Rights of electricity consumers

• Amendments in Electricity (Promoting Renewable Energy through Green Energy open Access) Rules, 2022

• Statutory Mechanism for timely payment to Generating Companies

OPERATIONAL AND FINANCIAL PERFORMANCE OVERVIEW

The following table gives an overview of the standalone and consolidated financial results of the Company:

In INR Lakhs

	Standalone			Consolidated
	31.03.2024	31.03.2023	% growth	31.03.2024	31.03.2023	% growth
Total income	1,54,757	1,65,875	(6.7%)	3,95,503	3,92,800	0.7%
Earnings before interest, tax and depreciation (EBITDA)	33,251	43,771	(24.0%)	1,85,586	1,96,759	(5.7%)
Profit after tax	21,901	32,234	(32.1%)	1,25,608	1,22,169	2.8%
Earnings per share	15.09	22.21	(32.1%)	65.04	63.93	1.7%

On a consolidated basis, Navas total income and PAT grew to Rs 3,95,503 Lakhs and Rs 1,25,608 Lakhs being the highest ever recorded. Profit after tax reported a marginal growth of 2.8% despite loss made in Ferro Alloys segment and increase in tax expenses which were offset by turnaround in financial performance of 150 MW power plant of Nava Bharat Energy India Limited (NBEIL) and improved sales by Mining division.

The Companys standalone operations for the year recorded a dip in both the income and profitability because of lower realizations and sales volume of Manganese Alloys. The export market for Manganese Alloys saw a further contraction during the year with the prolonged geo-political issues and persistent inflation in the developed world which when diverted to domestic market created pressure on the sales realizations. The improved operating and financial performance of 150 MW energy plant at Odisha Operations and other income has helped the company to tide over the losses made by Ferro Alloys.

The Company has repaid long-term loans at both the Standalone and Consolidated levels during the year with potential significant interest cost savings going forward. During the year the Company has repaid the term debt of Rs 9860 Lakhs and Maamba Collieries Limited (MCL) repaid US$ 314.4 Million of project finance loans making it long-term debt free.

In parallel, the mining division in Zambia has reported healthy growth in sales and profitability, driven by improved coal sales and operational efficiencies.

In the agri-business segment, Nava Avocado, has made significant strides in plantation activities with promising yields as per the expected timelines. It has planted 75,000 trees in 225 hectares so far. Plans are afoot to plant another 20,000 in the next few months. Going by the present values of Avocado, revenues of $50 m to $60m can be anticipated.

Summary of the performance segment wise:

METALS DIVISION:

The Company has two plants producing Ferro Alloys, as under:

Location	Telangana - Operations	Odisha - Operations
Capacity	4 smelters - 125,000 MTPA	2 smelters - 50,000 MTPA
Products	Silico Manganese and Ferro Silicon	Silico Manganese

Ferro Alloys division (segment) suffered decrease in revenues by 17.4% to Rs 87,328 Lakhs and loss of Rs 7,065 Lakhs during the year on account of two factors:

a. Reduced demand in export market with the continuing geopolitical risks and high inflation;

b. Production loss for 5+ months at Odisha Operations with the accident to Raw Material handling system The quantitative details of the division are:

Silico Manganese: Production was lower by 6.6% to 104,963 MT owing to production loss while sales quantity was higher by 17.4% at 113,942 MT with the sale of opening inventory. Export market was weak through the year while domestic demand has helped in pushing the sales but the realisations dropped below the cost of production owing to glut situation for Silico Manganese Alloys.

Though Manganese ore prices have decreased in line with the market, the costs of other major raw materials - reductants and power havent dropped. Owing to decrease in coal supplies from Singareni Collieries and the frequent increase in coal prices, the cost of captive power is increasing y-o-y at Telangana Operations trending with State Utility tariffs.

In Odisha Operations, total production was 18,987 MT which was lower relative to the optimal production capacity of 48,000 MT owing to the accidental outage for about 5 months. The production has restarted in Jan 2024 post repairs to the Raw Material handling system and the Company has during this period strengthened other support structures. Further optimisation improvements were carried out for reductants mix resulting in savings going forward.

During the year, the Company received a Patent for the "Process of recovery of metal values from GCP dust utilising Manganese ore fines by Agglomeration". To enhance the benefit of this process, the Company has commissioned an Ash Products Plant at Odisha Operations with capital outlay of Rs 2500 Lakhs.

The upward trend observed in sale prices during the period of Jan - Mar 2024 and large Manganese ore inventory accumulated at low prices provides a positive outlook for the Manganese Alloys in the near term.

Ferro Silicon: At Telangana Operations, the Company diversified into production of Ferro Silicon in one furnace from January, 2024, with positive contributions. The Ferro Silicon operations are ably supported by captive Quartz mining.

ENERGY DIVISION:

Nava standalone has three power plants totaling capacity of 284 MW of which 204 MW is earmarked for captive consumption in ferro alloys which at optimal capacity requires about 90 MW of power while the balance power could be utilized for opportunistic merchant sale. 20 MW mixed fuel IPP continues to remain idle owing to higher specific fuel consumption. The Companys subsidiary NBEIL operates a 150 MW merchant power unit in Telangana.

	Nava Limited (Standalone)			NBEIL (Subsidiary)
Location	Paloncha, Telangana	Kharagprasad, Odisha	Dharmavaram, Andhra Pradesh	Paloncha, Telangana
Capacity	114 MW (1 x 50 MW, 2 X 32 MW)	150 MW (1 x 30 MW, 2 X 60 MW)	20 MW (1 x 20 MW) (not operational)	150 MW (1 x 150 MW)
Plant Type	CPP	CPP - 90 MW IPP - 60 MW	IPP	IPP
Fuel	Coal	Coal	Coal & Bagasse	Coal
Source Mix	Linkage	Linkage & E-Auction	E-Auction	E-Auction

90 MW

In FY 2023-24 increased demand from manufacturing industry has made many State Utilities come up with Short- term PPAs for most part of the year. This has helped in achieving higher operational parameters and increased profitability at Odisha Operations.

The Energy division has particularly excelled with NBEILs 150 MW power plant, witnessing a turnaround in its financial performance marked by substantial increase in PLF in the current financial year. The Standalone Energy division reported revenue of Rs 72,671 Lakhs with a dip by 7.0% y-o-y while the Consolidated financials registered a revenue growth of 13.2% at Rs 302,087 Lakhs for the year Vs FY2023.

The Standalone revenue was lower because of lower load operations of 114 MW plant at Paloncha Operations due to high coal costs from Singareni Collieries. 150 MW power plant at Odisha Operations has operated at exceptional PLF of 76.5% Vs 65.3% for FY2023 with the availability of bilateral contracts throughout the year at higher tariffs. Competitive marginal cost and higher availability of 150 MW power plant at Odisha operations have helped in contributing significantly to the profit made at Standalone to neutralize the loss from Ferro Alloys division.

Higher coal costs from Singareni Collieries and higher station heat rate of 114 MW power plant at Telangana Operations have increased the cost of power generation further straining the Ferro Alloys production costs. To overcome the situation ~32 MW power was wheeled from Odisha Operations with a positive trade-off margin thus forcing to operate only one unit of 50 MW / 32 MW for most of the year. Merchant power sales were made during Quarter 1 only when the tariffs over the power exchanges were higher and remunerative.

During the year, the Company and NBEIL received Rs 1767 Lakhs and Rs 1772 Lakhs respectively from Telangana State utilities towards delayed payment surcharge pertaining to previous years.

NBEILs 150 MW power plant operated at a healthy PLF of 63.7% during the year, compared to 18.8% for FY 2023, aided by increased demand for power and availability of bilateral contracts. The Company reported a total revenue of Rs 575.2 Crore and PBT of Rs 115.8 Crore for the year significantly improving the financial position.

The power plant is sourcing coal majorly from Mahanadi Coalfields and Western Coalfields under Shakti B-III scheme wherein the availability and sources of coal have increased y-o-y while during the year, the coal was procured at base rates only. Continuous efforts and volumes have helped in bringing down the transportation costs with sourcing by rail rakes.

NBEIL repaid its inter group debt by Rs 63.9 Crore during the year and is aiming to become debt free by June 2024. The reduction in finance costs will result in reduction of cost of generation of power, thus increasing the competitive participation to sell power at lower tariffs.

Mamba Collieries Limited, Zambia—Energy & Natural Resources:

NAVAs step-down subsidiary Maamba Collieries Limited (MCL) is engaged in the businesses of Energy and Coal mining operations in Zambia. NAVA holds 64.69% equity stake in MCL through its wholly-owned subsidiary Nava Bharat (Singapore) Pte. Ltd., based in Singapore.

MCL operates Zambias only integrated coal-fired power plant with an installed capacity of 300 MW, which represents about 9% of the countrys total installed energy generation capacity but contributes 12%+ energy to the country. MCL has a long-term 20-year Power Purchase Agreement (PPA) with the state utility. Further MCL is a member of Southern Africa Power Pool (SAAP) which allows it an alternative market to sell the excess power.

During the year, MCL power plant maintained its high operational parameters of declared plant availability of 89.7%, PLF of 89.9% Vs 92.0% and 91.9% respectively for FY2023. Power generation was 2,369 MUs compared to 2,415 for FY2023. The power plant operated continuously excepting for the planned maintenance activities which helped in sustaining the consolidated financial performance.

Against the arbitration award of US$ 518.1 Million, MCL received US$ 274.0 Million as in March 2024 being 53% of the receivable. During the year, MCL utilized the Arbitral Award payments and internal accruals to prepay the entire outstanding debt of US$ 314.4 Million thus becoming debt free which opened the window for distributions to sponsors from FY 2025 onwards.

MCLs mining divisions performance improved with the higher merchant sales at 487,776 MT, a growth of 35.3% y-o-y over that of 360,407 MT for FY2023. Average realizations declined by 6% compared to previous year due to the strategy adopted for pushing the sales.

MCL Financial performance:

Particulars	FY 2023-24	FY 2022-23	Growth %
Operational Revenue	199,543	1,88,884	5.6%
	(US$ 241.0 Million)	(US$ 234.9 Million)
Other income	15,544	25,318	(56.4%)
	(US$ 18.8 Million)	(US$ 43.1 Million)
Total Revenue including	215,087	214,203	(6.6%)
exceptional items	(US$ 259.8 Million)	(US$ 278.1 Million)
EBITDA	143,339	145,894	(1.8%)
	(US$ 159.1 Million)	(US$ 181.5 Million)
PAT	89,087	83,973	6.1%
	(US$ 107.6 Million)	(US$ 104.5 Million)

The power plant reported operating revenue of Rs 177,821 Lakhs (US$ 214.8 Million) and EBITDA of Rs 106,902 Lakhs (US$ 129.1 Million) while the profit for the year was Rs 78,353 Lakhs (US$ 94.6 Million). The corresponding figures for FY 2022-23 were Rs 172,404 Lakhs (US$ 214.5 Million, Rs 135,377 Lakhs (US$ 168.1 Million) and Rs 79,667 Lakhs (US$ 99.1 Million). Expected credit loss of Rs 19,458 Lakhs (US$ 23.5 Million) was reversed during the year in proportionate to the Arbitral payments from ZESCO.

Other income was lower during the year as MCL didnt charge any interest on ZESCO for the outstanding receivables as agreed under the Arbitration award. Further during FY2023, power division had forex gain of US$ 10.6 Million Vs US$ 2.1 Million for FY 2024.

Coal Mining Operations

Mining operations reported growth in revenue and profitability with higher merchant coal sales during the year. The coal division reported increased revenue of Rs 45,834 Lakhs (US$ 55.4 Million) from Rs 35,938 Lakhs (US$ 44.7 Million) for FY2023. Profit for the year grew by 138% to Rs 10,734 Lakhs (US$ 13.0 Million) from Rs 4,099 Lakhs (US$ 5.1 Million) for FY2023.

Magnetite Ore mine in Zambia:

MCL has a Small Scale Mining License for Magnetite ore in the Central Province of Zambia. Recent Magnetic Survey of the licensed area has indicated the prevalence of high-quality Magnetite ore, amenable for wide usage. MCL will be conducting exploration studies in the license area to ascertain the mineable resources and extractable reserves for commercial exploitation.

THE HEALTHCARE DIVISION:

Healthcare is one of the fastest growing sectors with the demand for lifestyle treatments and diagnostic services growing exponentially. The healthcare sector is seen as promising in the long run, with many areas of medical treatments, distribution of medicines and apparatus, diagnostic services and other medical services.

The Companys investments in this division are through a Singapore Joint Venture Company - Tiash Pte. Ltd., with a 65% stake. TIASH operates in Malaysia and Singapore via two subsidiaries - The Iron Suites Medical Center (Singapore) and Compai Pharma (Singapore and Malaysia).

The Iron Suites Medical Center is an integrative medical clinic in Singapore specializing in the treatment of iron deficiency, predominantly with IV iron and other lifestyle diseases. This center brings in professional practitioners on to one platform for a holistic approach to medical care.

Compai Pharma is a medical distribution Company with operations in Malaysia and Singapore. Monofer distribution in Malaysia and Singapore has been terminated by the Principal Pharmacosmos A/S, Denmark and negotiations are underway for the termination fees. Compai Pharma added Faecal Microbiota Transplants (FMT) products to the distribution business in Malaysia and a few more products are under pipeline.

The operating revenue of the healthcare division grew by 15% compared to the previous year. The Company is working to expand the distribution portfolio and the business to other Southeast Asian Countries.

AGRI-BUSINESS:

Kawambwa Sugar Limited (KSL) has been allotted 10,000 Ha of land for growing commercial agriculture crops in Luena farm block in Zambia. The Avocado plantation over 1100 Ha of land has been transferred to new company Nava Avocado Limited as Avocado business requires a different branding and marketing strategy.

Avocado being considered "Superfood" for its high nutrition value has growing demand from the developed countries and demand is picking-up with increase in per capita income levels of the developing countries. Nava is developing one of the worlds largest farm with 400,000+ plants, to be planted by FY2027. As in March 2024, 75,000+ Avocado plants have been planted and 20,000+ plants are available in the nursery for plantation. Orders have been placed for 100,000 trees, to be planted by Mar 2025..

Revenue from the planted Avocado trees is expected from early 2026 and will increase gradually with the growth of trees. A state-of-the art packhouse and processing facility will be developed for proper sorting, storage packing of Avocado fruits suited for export market.

OPERATIONS & MAINTENANCE SERVICES:

The Companys foray into Operations & Maintenance (O&M) services for power plants took its genesis with the service offering to MCL. These services have been delivered in accordance with the O&M Contract.

The NAVA Group Companies have implemented a risk matrix approach, considering both on-site and off-site deliverables under the contract. This has helped MCL maintain optimal performance for its 300 MW power plant, taking into account local grid conditions and other limitations.

Building upon its experience of operating medium-sized power plants in India, coupled with its O&M expertise in Zambia, the company plans to explore additional business opportunities in the O&M space in Africa and the Middle East. The aim is to leverage its knowledge and track record to pursue similar projects and partnerships in other regions.

MANGANESE ORE MINING:

The technical studies of the allotted Manganese ore concession in Cote dIvoire have proved to have limited presence of Manganese ore. To enable backward integration to Silico Manganese production in India and provide further value-added opportunities, the Company is evaluating alternate mines for Manganese ore for exploration within Cote dIvoire.

OUTLOOK:

Metals:

Weak demand for steel in international market is expected to persist at least for few months in 2024, representing a downside risk to the metals and mining sector as many commodity prices slide. The recent spurt in all Alloys and ore prices is good for the industry but needs to be observed for consistency.

Steel demand in India is expected to see good growth in 2024 with the interim budget signaling strong demand with 11% increase in infrastructure budget. Steel demand growth is expected to continue, albeit slightly subdued in the first half of the year due to slowdown of construction during general elections.

The domestic market for ferro alloys is expected to be quite stable given the uptick in demand for steel amid increased manufacturing activity for local consumption. However, continued weak export market will continue to exhort pressure on the realizations in the domestic market.

The Company has raw materials stocks available for ~6 months production procured at low prices which shall yield good margins. The recent reduction in specific fixed costs and optimal utilization of reductants mix at Odisha Operations will help the company in improving the realisations.

INDIAN ENERGY OPERATIONS:

Indias focus on local manufacturing production-linked incentives and export-oriented industries, rising urbanisation, railway traction etc will continue to provide impetus for power demand implying higher tariffs for the sector. India is focusing on strengthening the power sector through various policies, targets, and reforms to ensure that both generation capacity and the transmission & distribution infrastructure are augmented in a timely manner, to be able to support the nations growth aspirations while meeting long-term sustainability goals. The low per capita consumption rate of almost one-third of the world average, provides huge opportunity for growth.

The Indian power sector is beset with the challenges of coal availability, its higher costs and different tariff structures in the states. However, regular government interventions can overcome these challenges.

In Telangana, the coal supplies have become tighter from Singareni Collieries amid higher costs, thereby reducing the ability to sell power during non-peak hours over the power exchanges. The proposed restructuring of 114 MW captive power plant into CPP and IPP shall address the issue of abysmal operational performance of this power plant.

NBEILs 150 MW power plant has secured bilateral contracts for suppling power for major part of the year. The reduced finance costs and the availability of coal at base prices without any premium has increased the competitiveness of this plant.

Zambia Coal and Energy Operations:

MCL is working to further improve the high-grade coal sales to industrial consumers with the increased marketing efforts and pricing strategy overcoming the local competition. This division shall continue delivering strong financial performance with improved cashflows.

The plant availability and PLF of 300 MW energy plant are projected to be higher with no major shutdowns other than required annual maintenance shutdowns. The financial performance will improve further during the year with the reduction in finance costs owing to repayment of long-term debt and reversal of ECL provision in proportionate to the receivables realization from ZESCO.

MCL is expected to start repaying the shareholder loans and the accumulated interest to its sponsors during FY2024-25.

Discontinued Operations

The Company sold all the plant and equipment of the erstwhile integrated sugar plant. The Company is evaluating certain development options to monetize the land parcel in the Sugar division.

RISKS & Their MITIGATION:

The Company has a comprehensive and continuously improving risk management policy in-place, considering our industrys dynamics, emerging trends etc.

Risk Type	Risks Involved	Mitigation Strategy
Sector-specific and Market risks	• Performance of Steel Industry on which Ferro Alloys is dependent	• Close monitoring of macro-economic indicators and Steel Manufacturers
	• Creditworthiness and business continuity of the customers	• Sustained advocacy authorities
	• Prolonged inflationary pressures	• Redistribution of sales mix at the geography/ segment level, to balance demand supply requirements
	• Lower demand in export market due to geopolitical risks
Commercial risk	• Non-compliance and renegotiations of prices	• Credit risk assessment of private customers, advocacy for enforcement of payment security mechanism of Letter of credit
	• Moderation of prices putting pressure on margins	• Mitigation through prudent operations management, resource optimisation and prudent bidding practices
	• Increase in freight rates where the supplies are on CIF basis
Financial risk	• Availability of cost-effective capital: Availability of debt	• Balance between growth and deleveraging
	• Forex risk	• Focus on driving operating efficiency and cash generation
	• Liquidation of idle assets	• Hedging for commodity & exchange variation
		• No financial commitments linked to liquidation of idle assets
Business risk	• Availability of fuel for thermal plants at optimal cost	• Exploration of alternate coal and Manganese ore resources
	• Timely sourcing and availability of Manganese ore and reductants for Ferro Alloys	• Striving for back-end integration for Ferro Alloys with Manganese ore mining
Environment Risks	• Exposure to climate related rains, humidity, winds for Agriculture business	• Taking proactive measures in handling environmental hardships and insuring the plantation
Community Risks	• Growing expectations of the communities proximate to our operating locations	• Commitment towards addressing societal challenges through Corporate Social Responsibility initiatives
	• Pressure of local communities due to concerns over emissions	• Multiple structured forums for dialogue with communities

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Important in a dynamic and competitive environment that witnesses frequently shifting paradigms. Our Internal Control Mechanisms seek to safeguard the organizations assets as well as authorize, record and report all transactions correctly and in a timely manner. They ensure that we not only conform to local statutory requirements but meet the highest global standards and practices as well.

Our carefully structured Internal Control Framework constantly monitors and assesses all aspects of risks associated with current activities and corporate profile, including scientific and development risks, partner interest risks, and commercial and financial risks. Our Control Processes 1) safeguard the organizations assets, 2) prevent/detect frauds and errors, 3) ensure accurate and complete accounting, and 4) facilitate timely preparation of reliable financial information. They see to it that manual and automated processes for transaction approval and recording are adequately and effectively reviewed. They also ensure compliance with various policies, practices and statutes in keeping with the organizations growth and business complexity.

Our Internal Control Systems are reinforced by regular Management Reviews and verification by Internal Auditors. Further, all internal control functions and its entire gamut of activities are covered by independent audit whose findings are reviewed regularly by the Audit Committee and Management of the Company. A Board-appointed Audit Committee is entrusted with the task of 1) reviewing the Internal Audit Plan, 2) verifying the adequacy of the Internal Control System, 3) marking its Audit Observations and 4) monitoring the sustainability of the remedial measures.

FINANCIAL PERFORMANCE

Through the year the export demand for Ferro Alloys was weak putting pressure on realizations which plummeted to below cost of production. Further accident to raw materials handling at Odisha Operations resulted in production loss. The demand for power was higher throughout the year with the increased demand from manufacturing activity and FY 2023-24 being election year had made the bilateral contracts availability for full year. The power plant of MCL sustained its operations while mining division had seen increased coal sales overcoming the competition from nearby mines.

Standalone Statement of Profit & Loss

The total income for the year was marginally lower by 6.7% at Rs 154,757 Lakhs Vs Rs 165,875 Lakhs for FY 2022-23. Lower realizations from Silico Manganese Alloys coupled with lower volumes have reduced EBITDA from continuing operations by 24.0% to Rs 33,251 Lakhs (margin of 21.5%) compared to Rs 43771 Lakhs (margin of 26.4%) in FY 2022-23. Profit for the year dropped by 32.1% to Rs 21,901 Lakhs Vs Rs 32,234 Lakhs for FY 2022-23 with the loss of Rs 7065 Lakhs made from Ferro Alloys division.

Standalone Balance Sheet

Shareholders Funds increased to Rs 3,66,193 Lakhs as on 31 March 2024 from Rs 3,53,340 Lakhs as in March 2023 led by ploughing of profits into the business. Dividend of Rs 8706 Lakhs was paid during the year to the Shareholders. Total debt decreased from Rs 13,224 Lakhs as in March 2023 to Rs 941 Lakhs with the total repayment of term loans during the year. Debt-to-Equity ratio improved to 0.003x as in March 2024 (0.04x in March 2023).

Consolidated Statement of Profit & Loss

Revenue from operations grew by 8.2% to Rs 3,81,812 Lakhs for the year compared to Rs 3,52,815 Lakhs during FY 2022-23 with significant improvement in NBEILs power plant operations and higher sales of mining division. Lower realizations from Ferro Alloys division and decrease in MCLs other income led to fall in EBITDA by 5.7% to Rs 1,85,586 Lakhs Vs Rs 196,759 Lakhs for FY 2022-23. EBITDA margins decreased from 50.1% for FY 2022-23 to 46.9% with losses made in Ferro Alloys division. Net Profit reported was highest ever of Rs 1,25,608 Lakhs a marginal jump of 2.8% against Rs 122,169 Lakhs in FY2022-23.

Consolidated Balance Sheet

Shareholders Funds increased to Rs 690,878 Lakhs as on 31 March 2024 from Rs 6,02,543 Lakhs as of 31 March 2023 with the retaining of profits made with the company except for dividend payout of Rs 8706 Lakhs. There was a significant reduction in debt with the repayment of term loans at Nava and MCL. Debt as in March 2024 got reduced to Rs 40,861 Lakhs from Rs 306,652 as in March 2023. Debt-to-equity ratio jumped significantly to 0.05x as in March 2024 Vs 0.51x in March 2023.

Key Ratios (based on Standalone & Consolidated Financial Statements)

Particulars	Standalone			Consolidated
	2023-24	2022-23	variance %	2023-24	2022-23	variance %
EBITDA Margin	21.49%	26.39%	-18.57%	46.92%	50.09%	-6.33%
PAT Margin	14.15%	19.43%	-27.17%	31.76%	31.10%	2.12%
Return on Average Capital Employed	8.06%	10.90%	-26.06%	16.88%	16.43%	2.74%
Return on Average Equity	6.09%	9.44%	-35.49%	16.28%	19.11%	-14.81%
Debt to Equity Ratio	0.003x	0.04x	-92.50%	0.05x	0.51x	-90.20%
Debtors Turnover Ratio	6.67x	7.59x	-12.12%	1.31x	0.99x	32.32%
Inventory Turnover Ratio	1.88x	2.17x	-13.36%	1.95x	4.17x	-53.24%
Current Ratio	8.23x	5.21x	57.97%	5.04x	2.16x	133.3%
Interest Coverage Ratio	47.02x	32.08x	46.57%	6.02x	4.18x	44.02%
Return on Average Net worth	6.09%	9.44%	-35.49%	16.28%	19.11%	-14.81%

Details of significant changes (i.e., change of 25% or more as compared to the previous financial year) in key financial ratios, along with detailed explanations:

Standalone:

• PAT margin, Return on Average Capital Employed, Return on Average Equity and Return on Average Net worth have dropped by more than 25% because of decline in Companys profit with the loss made in Ferro Alloys division with the lower demand and decreased realizations

• Debt to Equity ratio and Interest Coverage ratio improved with the pre-payment of term loans followed by increase in reserves and surplus owing to the profits generated during the year.

• Current ratio improved to 8.23x as in March 2024 with the pre-payment of term loans resulting in reduction of current liabilities.

Consolidated:

• Debt to Equity ratio improved with the pre-payment of term loans

• Debtors Turnover ratio improved to 1.31x with the reduction in receivables at MCL and increase in revenue from Inventory Turnover ratio has deteriorated with the increase in average inventories held at Standalone operations and NBEIL

• Current ratio and Interest Coverage ratio have improved with the pre-payment of term loans followed by increase in reserves and surplus owing to the profits generated during the year.

Materials Development in Human Resources/Industrial Relations front, including number of people employed:

Nava, with its strong belief to renew, revive and reinvent has built a respected global business that delivers sustainable growth and value for its stakeholders, while enriching lives in the countries and communities it works in. Throughout the legacy of Nava & in its continuous endeavour to grow, the organizations ability to anticipate and proactively respond to change, hinged behind the progress, while staying true to the values that make it unique. This spirit of constant renewal has allowed the Group to create, explore and realize new potential, across industries and geographies.

Work Culture:

The renewed & revived core values (Execution excellence, Partner-of-choice, Long-term thinking, Caring culture and Giving back) with traditionally anchored thinking characterised by high performance work environment, open communication, ethical business practices, empowerment, continual improvement / innovation to deliver large value business with uncompromising quality and safety standards within time and cost parameters, shall continue to be a strong driver of the Organization to march ahead. The culture further is reinforced by open and two-way communication, interactions and skip level meetings with the leadership team at regular intervals. Nava has a tradition of concern for people and respect for the individual. The voice of the individual is heard in the way we treat and interact with people. The Management believes that the Organisations success is attributable to its people and our highly talented & committed workforce gives us a competitive advantage in the business.

Capacity Building:

At the Organisational level, the staffing levels arise out of assessment of current and future requirements based on the short-term and long-term plans of the business growth. Staffing for specific projects is based on the new initiatives / businesses planned and implemented with initial intake of key / critical talent. Based on the progress made in the new business, capacity is further enhanced and induction from campuses is a part of the capacity building for meeting the long-term needs and for creating home grown talent pipeline.

Capability Building:

Capability needs in core competence areas relevant to Top Leadership along with the resources in various Impact Levels are identified with the support of TNI Process and addressed through Learning & Development Initiatives. The competencies that are needed for leadership positions are integrated into the Performance Management System (PMS) through the potential assessment. The Company has been consciously building the leadership pipeline for key & critical positions through career development & succession planning by identifying potential successors within the Organization and by virtue of lateral inductions. Employees are also encouraged to acquire additional qualifications / certifications for career growth to provide additional roles & responsibilities. To foster the Companys culture and to retain expertise, the Organization believes in internal transfers across domestic & international locations, which helps in ensuring that valuable insights & unique experiences remain within the Organization.

Diversity:

Nava is an equal opportunity employer and encourages diversity and promotes a diverse culture. To ensure diversity, recruitment is carried out from all the regions of the country with no discrimination in gender while hiring, keeping alongside the plant requirements. Diversity at our different plants is also ensured by engaging contractors and labour gangs across the country including hiring of local people, which helps in better coordination with local bodies and stakeholders. The age profile of the employees in the Organization is healthy.

Performance Management Process:

Career progression is carried out through a well-defined process which is linked to high performance and potential of the employees. Employees are assessed at the year-end, based on their achievement targets set at the beginning of the year. Compensation benchmarking and performance management practices within the industry are revisited at regular intervals and relevant / contemporary practices are adopted. The Organization believes and inculcates a transparent performance management process. Employees goals are clearly articulated & defined, performance challenges identified and career development solutions provided to help them advance in their career and motivate them to achieve their career goals.

Retention:

Our retention strategy for all employees focusses on integration, career progression opportunities, HR friendly policies alongside Reward & Recognition, etc. Integration is facilitated through well-knitted induction programs and suggestion schemes. Assimilation of new employees into our culture is being done through structured induction program and employees posted at respective plant locations are well integrated into the respective function(s). HR Policies continually evolved in line with the contemporary needs of the workforce & industrys best practices, with an employee centric approach and employee reciprocation with their appreciation which helped the Organisation in developing and retaining the talent and contain attrition. Continual efforts are made through various HR related surveys for process improvements & making the Company a great place to work.

Industrial Relations: The Company has an impeccable record in terms of maintaining harmonious industrial relations. The year gone by too did not lose a single man day on account of any industrial strife / disturbance.

The number of permanent employees on the rolls of the Company stood at 593 (1073 across all the Companies of the Group globally) as on March 31, 2024.