PSU has shored up its finances and fast-tracked projects ahead of public offering

The central sector aluminium behemoth, National Aluminium Company (Nalco), is in the limelight following the government decision to divest a part of its stake in the company. Nalco?s top officials are busy readying the navratna company for the stake sale.

While efforts are being made to make the balance sheets stronger, the on-going brownfield and greenfield projects are being put on the fast track by the company. Nalco is looking at inorganic growth to enrich its profile and product mix, and to build a steady financial base.

Nalco has been part of the government’s disinvestment programme for this fiscal. The government wanted to raise about R1,400 crore by offloading at least 12.15% stake in Nalco through the offer for sale (OFS) route. But the company’s dismal financial performance in the second quarter—its net profit dipped to R5 crore from R139 crore in the same quarter last year?delayed the selloff.

However, the company bounced back in the third quarter, reporting a net profit of R119 crore against R51 crore in the same period a year ago. The company expects its annual net profit to touch R500 crore this financial year. Net profit for the nine-month period this year was at R347crore, on a turnover of R5,000 crore.

Besides the financial hiccups, the company also faced the problem of raw material linkages, as the mining lease of its Panchpatmali bauxite mines expired in October 2012 and it could not enter the mining area in absence of an environmental clearance even though it was authorised to raise minerals on deemed lease conditions. The problem, however, was sorted out before it affected plant operations.

With finance back on track and the minining issues resolved, Nalco is now focusing on its expansion and diversification programmes. ?Following consolidation of the aluminium business, the company has plans to expand further and venture into new areas?, says chairman and managing director, Ansuman Das.

Among the world?s low-cost producers of primary aluminium, thanks to its high quality bauxite mines, Nalco has completed two phases of expansion of its Orissa complex by investing R7,500 crore. This raised Nalco?s bauxite mining capacity to 63 lakh tonnes per annum, and the alumina refinery capacity to 21 lakh tpa. Similarly, the capacity of aluminium smelter has gone up to 4.6 lakh tonne and the captive power plant to 1200 MW.

The company has now started the third phase of its brownfield expansion at its facilities which would cost about R7,500crore. Besides this, the company is planning a R16,000-crore greenfield smelter project in the Sundergarh district of Orissa. ?We have been promised more bauxite mines in the state. The new mines would be for captive use for the Sunderarh project?, said Das.

The company has also taken up various greenfield smelter projects in other states. The plan to set up a million tonne per annum aluminium refinery in Gujarat with an investment of R4,500 crore is progressing well. Preparation of the detailed project report (DPR) has begun. The company is negotiating with the Gujarat Mineral Development Corporation (GMDC) for participating in the project and also for bauxite supply.

In Andhra Pradesh, Nalco proposes to set up a 1.4 million tonne per annum refinery based on the bauxite reserves there. As a prelude to the project work, Nalco has started corporate social responsibility activities in and around the bauxite mine areas in Visakhapatnam.

The aluminium major is looking at off-shore opportunities to strengthen its aluminium business. It proposes to set up a smelter in Indonesia to take advantage of the good quality coal at economical price in that country.

As part of diversification, the PSU has ventured into merchant power generation. It has firmed up a joint venture with the Nuclear Power Corporation of India Ltd (NPCL) to set up nuclear power plants in India. The joint venture has taken up the job of setting up the R 11,500-crore Kakrapara units 3 & 4 of 700 MW each in Gujarat. The project would be completed by December 2015.

Nalco is also investing in wind and solar power projects. It has commissioned a 50.4 MW wind power project, at a cost of R274 crore, at Gandhikota in Kadapa, Andhra Pradesh. The project is being expanded with another unit of 50.4 MW.

The company is setting up a second wind power plant at its worked out mined areas at Panchpatmali in Koraput district of Orissa. A solar power plant of 15MW is also on the cards.

Recently, the company has laid the foundation stone for a R283-crore wind power plant of 47.6 MW capacity at Ludharva in Jaisalmer, Rajasthan. Besides power generation, Nalco also proposes to foray into mining to leverage its experience in the sector.

Obviously, disinvestment keeps companies on their toes.