Nalco blames CIL for profit slump

State-run aluminium producer National Aluminium Company (Nalco) has blamed Coal India Limited (CIL) for not supplying adequate coal in the second quarter, which led to poor financial performance of the Navaratna company in this period.

During July-September, Nalco posted Rs 139.34 crore net profit as against Rs 224.04 crore in the same quarter in the previous fiscal, down by 38 per cent.

The less than expected result is mainly on account of lesser and poor quality of coal supplied by Mahanadi Coalfield Ltd, a subsidiary of CIL during the quarter, which forced the company to use more expensive imported coal, buy power from state grid and also use more quantity of costlier heavy furnace oil, said a company release.

The additional impact of power and fuel on operating cost during the quarter was Rs 149 crore, he added.

In September, Nalco had to shut down about 60 smelting pots out of a total of 960 pots at its Angul facility due to shortfall in power production in the captive power plant following coal supply problems.

As against the requirement of 950 Mw of power per day to run the smelter in full capacity, the production in power plant came down to about 640 Mw due to coal shortage at the plant.

To meet the power requirement at its smelting plant, Nalco had to buy 200Mw power from Grid Corporation of Orissa (Gridco) at premium rates. It also had to import expensive coal from abroad, which dented its profit margins. Power cost makes about 35 per cent of the expenses of an aluminium company as huge amount of electricity is needed to produce aluminium metal from powdery alumina. The sales turnover of Nalco, however, grew by about nine per cent to Rs 1,689.38 crore against Rs 1,548.75 crore in the second quarter last year on higher prices of alumina and aluminium, said the release.