NALCO’s expansion on track despite slowdown: Chairman (Interview)

January 7th, 2009 - 11:46 am ICT by IANS  

Bhubaneswar, Jan 7 (IANS) National Aluminium Co (NALCO), Asia’s largest integrated aluminium producer based here, said its Rs.400-billion expansion plan is on track despite the global financial crisis and falling demand.”It (slowdown) has not yet affected our expansion plans,” company chairman C.R. Pradhan told IANS in an interview.

NALCO had announced last year that it would invest around Rs.400 billion in the next five years on various expansion projects. These include smelter and power plants in Indonesia, South Africa and Iran.

“So far we have been able to sustain ourselves. Our stock has not increased beyond certain limits. Let’s see a few more months,” Pradhan said, adding: “At least by the end of this financial year, we will be able to know where we stand.”

“We are going ahead with our normal production. We are trying to push the metals as well as alumina to the market as far as possible,” he said.

Alumina sales during the first half of this fiscal were higher at 443,479 tonnes as against 424,615 tonnes a year ago. Metal sales were 172,688 tonnes as against 172,903 tonnes during the comparable period of the previous fiscal. The slight slump was mainly attributed to the intermittent coal crisis.

NALCO’s net profit in the April-September period this fiscal went up by 9.4 percent to Rs.9.69 billion (Rs.969.8 crore) from Rs.8.86 billion, while the sales turnover during the period posted a 20 percent increase.

Maintaining that this was a “challenging time for everybody”, he said: “We have to be prepared for all types of eventualities. We have not taken any drastic steps yet. Whatever decisions we take will be taken looking at a long term perspective.”

“The main problem is selling your products. Otherwise, you will be piling up your stock and finally when there is no place to keep it, you have to suspend some of your activities.”

Though metal prices are down, he said, there is still demand in both domestic and international markets. “We are able to sell products. People are waiting because prices are fluctuating.”

“Once they are stable, I think the demand will go up further. Manufacturers are also waiting for proper, stable prices,” added the NALCO chairman.

Last year, the company had signed a deal with Indonesia to set up a 500,000-tonne smelter plant and a 1,250 MW captive power plant in that country. NALCO plans to invest around Rs.140 billion in this greenfield project.

The company is also exploring the possibility of setting up a smelter and power plant in South Africa at an investment of around Rs.160 billion. In Iran, a 310,000-tonne smelter has been planned.

It is expecting detailed project reports this month from M N Dastur and Co., NALCO’s consultant for the Indonesian and Iranian projects.

In December, the aluminium manufacturer signed an agreement with RAK Minerals and Metal Investment of the United Arab Emirates to offload 24 percent stake in the Indonesian smelter and power plant.

NALCO is also planning to include another investor in the project and has offered to sell 25 percent more stake. However, Pradhan said nothing has been finalised in this regard. “No negotiation is on now. We are waiting for the detailed project report,” he said.

The company had to cut down production in the Damanjodi refinery in the district of Koraput, Orissa, last year due to a severe shortage of coal. It also shut down two of the seven power units that feed its smelter in Angul district.

“At present, we have sufficient coal stock. The supply is adequate. We are not facing any shortage,” Pradhan said.

The company does not have any layoff plans either. But Pradhan said the company was taking some austerity measures to cut cost. “Recruitments will be judiciously done as per the requirements,” he added.

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