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National Aluminium Company Ltd.

BSE: 532234 Sector: Metals & Mining
NSE: NATIONALUM ISIN Code: INE139A01034
BSE LIVE 15:56 | 22 Sep 76.10 -5.95
(-7.25%)
OPEN

81.80

HIGH

81.80

LOW

75.25

NSE 15:58 | 22 Sep 76.10 -6.00
(-7.31%)
OPEN

81.65

HIGH

81.65

LOW

75.25

OPEN 81.80
PREVIOUS CLOSE 82.05
VOLUME 1153936
52-Week high 85.40
52-Week low 42.95
P/E 21.32
Mkt Cap.(Rs cr) 14,710
Buy Price 76.10
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00
OPEN 81.80
CLOSE 82.05
VOLUME 1153936
52-Week high 85.40
52-Week low 42.95
P/E 21.32
Mkt Cap.(Rs cr) 14,710
Buy Price 76.10
Buy Qty 50.00
Sell Price 0.00
Sell Qty 0.00

National Aluminium Company Ltd. (NATIONALUM) - Chairman Speech

Company chairman speech

ANNUAL REPORT 1999-2000 NATIONAL ALUMINIUM COMPANY LIMITED CHAIRMAN'S SPEECH It gives me great pleasure to welcome you to the 19th Annual General Meeting of the Company. The notice convening the meeting, the Directors' Report and the Audited Accounts for the year 1999-2000 have been with you for some time now, and with your permission, I take them as read. Before I take up the agenda for today's meeting, I would like to share with you some of my thoughts on the general economic scenario, the aluminium industry and the performance of your Company. The Economy The performance of the Indian economy in 1999-2000 has been encouraging despite a slight fall in GDP, attributed to the negative growth in agricultural production. A surge has been experienced in the industrial production indexed at 8.1 per cent, compared to 3 .8 per cent of the previous year. Corporate sector sales have registered an increase of 22.9 per cent. Exports overcame the negative trend of 1998-99 to touch a growth rate of 13.3 per cent, with increases taking place in the export of manufactured goods. Foreign exchange reserves of the country increased from 29,522 million dollars to 35,058 million dollars. On several other parameters, such as reduction in gross fiscal deficit, energy production and foreign capital inflow, the economy has demonstrated healthy trends. There was no direct benefit for the aluminium industry in the budget proposals of 2000-2001. On the other hand, export income has been brought under the tax net. However, a welcome feature of the Finance Bill has been the further simplification of the tax administration. I am sanguine with the hope that the overall growth in the economy, being consistently pursued by the Government, will boost the aluminium industry in many ways. The Aluminium Industry In the face of many changes and challenges, Indian aluminium industry has remained remarkably resilient over the years. Aluminium was among the first few commodities, whose import was liberalized under the economic reforms. The industry has not only adjusted itself to global competition on the home grounds but also taken to exports in a big way. It is also significant that the industry while maintaining its economic viability, against substantial increases in the cost of labour and other major raw materials, has been able to make large-scale investments on modemization, expansions and captive generation of power. This goes to prove the inherent strength of the Indian aluminium industry to remain globally ,competitive. Emerging from the regulatory regime, the aluminium industry is now well poised for expansion and growth, keeping in view the export opportunities and the cost competitiveness of Indian producers. It is a matter of pride that your Company is leading the Indian aluminium industry in exports. The large reserve of about 3000 million tonnes of bauxite, I am sure, will help India to achieve a coveted role in the international aluminium market in the new millennium. Taking into account the on-going programmes of expansion, the smelting capacity of the country will increase from 7,14,000 tonnes to 9,29,000 tonnes per annum in the next 2 to 3 years time. The share of your Company in the expanded capacity will be more than 40 per cent. On alumina front, your Company is about to complete the doubling of its 8,00,000 tpa Refinery. This will go a long way to consolidate the position of your Company in the world alumina trade, ahead of the greenfield alumina projects planned on east coast bauxite deposits. The current intenational market scenario is encouraging for the industry. The growth environment of the industrialized countries, the recovery of the East Asian economy and closure of some of the high cost Western smelters, are some of the factors keeping the aluminium market buoyant. This trend is expected to continue for a couple of years with LME prices projected in the range of l500 to 1600 US dollars per tonne. The domestic demand, which was 5,35,700 tonnes during 1999-2000, is also expected to remain favourable. In view of the recessionary trends in the economy getting gradually outpaced, aluminium consumption IS slated to witness a growth of 7 to 8 per cent per annum. The pattern of aluminium consumption is undergoing significant changes. Aluminium demand. which has been closely related to developments in electrical sector, is expected to get more shares in construction, transport and packaging sectors. These are good signs. I must say, the outlook of the industry is quite upbeat. The Performance Coming our of the Smelter Plant crisis of 1998-99, your Company. could achieve remarkable improvements in production, marketing, income and profit for the year 1999-2000. The sales turnover of Rs.2142.32 crore is a record, with the highest ever export income of Rs. 1031.64 crore. Matching with the sales turnover, your Company achieved the highest ever gross profit of Rs. 1000.65 crore, which after payment of corporate income tax translates into a net profit of Rs.511.53 crore. As you may have noted from the audited accounts presented to you, the Company has improved its performances on all financial parameters, enhancing the book value per share of Rs.10.00 from Rs.44.01 as on 31 March, 1999 to Rs.49.67 as on 31 March, 2000. The Company has proposed a record dividend of 20 per cent, while meeting the entire capital expenditure of Rs.777.43 crore of the on-going expansion projects out of internal resources.. On the production from, the bauxite production and transportations exceeded the rated capacity for the 6th time with a record achievement of 28,22,464 tonnes Production of calcined alumina at8,86,000 tonnes exceeded the capacity, but fell short of an earlier record by 8,500 tonnes. In powergeneration. the company performed better than previous two years with a net generation of 3,985 million units. The most significant achievement of your Company has come from the bench- marking of the capacity utilization of the 2,30,000 tonnes Smelter Plant. Here, for the first time, all the 480 pots were put into operation on a sustained basis during the year. This has not only resulted in a record output of 2,12,663 tonnes of metal but also improved the consumption norms and quality parameters. Importantly, this achievement has helped to renew the confidence and the commitment of the entire NALCO Collective. Expansion and Growth Your Company has taken rapid strides in the on-going Rs.3700 crore expansion programme. The first phase of Alumina Refinery expansion has been commissioned in June, 2000, which takes its capacity from 8,00,000 tonnes to 10,50,000 tonnes per annum. The final phase of expansion to 15,75,000 tonnes will be completed by April, 2001. The Company has already doubled the capacity of Bauxite Mines to 4 lakh tonnes, to meet the higher demand for ore. With the large-scale expansion of the Alumina Refinery, your Company is all set to become a key player in the international market, with nearly a million tonnes of alumina as exportable surplus. To manage larger volumes of exports, the Company's Port Facilities at Visakhapatnam have undergone modifications and additions at a capital cost of about Rs.29 crore. The Mines and Refinery expansion, which envisages a capital cost of Rs.1,664.60 crore has been internally funded so far. The total financial commitments made so far being about Rs.1,280 crore, it is expected that the Company will achieve substantial savings on this brownfield expansion. The lowered cost of expansion and internal funding of the capital cost will result in lower production cost of alumina, which has been the hallmark of your Company, in the field of alumina production in the world. The expansion work at the Smelter and Captive Power Plant is also going on in full swing. While the Smelter capacity is being expanded from 2,30,000 tonnes to 3,45,000 tonnes per annum, the CPP capacity is now scheduled for 960 mw (8 units of 120 mw each) as against the earlier plan for 840 mw (7 units of 120 mw each). Although the basic technologies remain unchanged both at Smelter and CPP, many on -line improvements are being included. Acquisition of IAPL As a strategic initiative, your Company has fully taken over International Aluminium Products Ltd. (IAPL). This 50,000 tonns cold rolled products project, adjacent to the Smelter Plant, will have the unique advantage of direct supply of hot metal, saving on energy and transportation. The soft credit tie-up with EFFIBANCA of Italy to the extent of about Rs.150 crore arranged by FATA Hunter against the supply of plants and machineries will be continued in favour of your Company. The funding pattern of IAPL wi,ll provide advantages to the Company and its shareholders. The project activities have been geared up for completion in stages, starting from March, 2001. Envisioning the Future In the fast changing business environment of the 21 st century, your Company is deeply concerned about the long-term strategies, which it needs to adopt for survival and growth. In recent months, there have been several brainstorming sessions among the executives at various levels to generate ideas on the future course of business. The consensus seems to be in favour of pursuing a future, based on the core competence of the Company, that is, manufacturing alumina and primary aluminium. The future plans of creating downstream or upstream facilities, further expansion of basic capacities, collaborations, joint ventures, research and development activities should be in consonance with the core strengths and should create the synergy required for success. Your management is in the process of formulating a broad plan for the future, which should hold good for the next 10 to 20 years. I must admit that the performance of your Company is highly sensitive to its human resources. Technology, quality, quantity and cost are sustained through the collective endeavour of the people who work for the Company. In charting a future, be it long term or short term, a great deal of confidence is reposed on the willingness and ability of the people to learn, adopt and adjust to the dynamic environment of the future. I believe, your Company has the right kind of people to nurture the growth and prosperity of the oranization. Acknowledgement On behalf of the Company and all of you, I take this opportunity to thank our valued customers, suppliers, bankers, consultants, the Members of the Board, the Government of India, the Government of Orissa and in particular the Nalco Collective for their excellent support and co-operation to achieve yet another year of success for the Company. Bhubaneswar P. Psrvsthisen Septelnber 30, 2000 Chairman