State-run aluminium maker Nalco is eyeing an aggregate increase of Rs 1,100 crore in its net profit over the next 2-3 years, which could be made possible from commissioning of a coal mine, raising of refinery capacity and a couple of other such value-accretive expansions. In 2018-19, Nalco had clocked a record Rs 1,732-crore net profit.
The commissioning of the Utkal D coal block, awarded to it in 2016, will reduce its coal cost at least Rs 2,300 per tonne. The mine will produce around two million tonne of coal a year, resulting in a Rs 560-crore net profit to the company. Nalco buys coal from Coal India.
“As of now, average landed cost of coal for the company comes around Rs 4,000 per tonne. The cost from the Utkal D mine will be around Rs 1,700 per tonne. Hence, the expected savings will be around Rs 560 crore a year,” a source in the company said.
The brownfield expansion of the refinery capacity by one million tonne by 2022-23 will also add Rs 380 crore to the company’s net profit. Nalco currently has 22.75 lakh tonne of refinery capacity. The company is investing around Rs 5,540 crore for capacity addition at Damanjodi.
In a joint venture with Gujarat Alkalies and Chemicals Ltd (GACL), the company’s proposed JV for caustic soda production, which is likely to be operational by 2020, will accrue Rs 80 crore to the net profit.
The plant will have 2.7-lakh tonne production capacity. It generally requires 0.2 tonne of caustic soda in the making of one tonne of aluminium.
The plant, coming with an investment of Rs 2,000 crore, has received environmental clearance. Land development, piling works and others are in full swing. Major packages of the caustic soda project and captive power plant have been awarded. The land for the project has been transferred in favour of the JV.
It is also adding another wire rod mill by 2020. The mill will have an annual capacity of 60,000 tonne and will improve company’s profitability by Rs 60 crore.
The company is also looking at a cashless model for the supply of metal for value-added products for the small and medium enterprises. The company is likely to benefit Rs 50 crore from this.
“These are all doable and achievable,” a senior official said.