Nalco lines up Rs 200 bn capex over next 5 yrs to ramp up production

The public sector National Aluminium Company (Nalco) has lined up over Rs 200 billion investment over next five years for brownfield expansion of its aluminium, alumina and captive power generation capacities.

The company has started work to ramp up its aluminium production from 0.46 million to 1.06 million tonne at it Angul smelter with an investment of Rs 90 billion. Alongside, it is also building a new captive thermal power plant of 1320 Mw capacity at a cost of Rs 60 billion.

Similarly, the company is adding one million tonne of alumina capacity to its 2.1 million tonne refinery at Damajodi in Koraput district at an investment of Rs 55 billion. “The contracts have been awarded and the work will start shortly”, said Tapan Kumar Chand, chairman and managing director, Nalco.

While the refinery expansion is set to be completed in 2021, the new smelter line and power capacity addition will take around four years. “All these brownfield projects would double our turnover from Rs 93.77 billion in Fy18 to Rs 180 billion in 2023-24”, Chand said.

In the next phase, the company plans to set up a greenfield smelter of 0.6 million in Dhenkanal district at an estimated cost of Rs 100 billion. Though no timeline has been set for this venture, Aluminium Pechiney, the technology provider, is preparing the detail project report (DPR) and it is expected to be ready by February, next year.

With the new smelter, the company targets a turnover of Rs 320 billion by 2032, which would earn it the tag of a Maharatna company.

The expansion plan will significantly push up the company’s capex which hovers around Rs 11 billion now. “It won’t be a problem. With comfortable reserve and increasing cash flow, we can meet most of the expense from internal accruals and reserves”, Chand said.

In fact, aided by robust alumina/aluminium prices in the international market, the company has posted a net profit of Rs 13.42 billion in Fy18, which is the highest in last 10 years and double from previous year’s Rs 6.69 billion. Though the profit figure has got a boost from write-back of Rs 7 billion provisions towards the water charges following a settlement with the state government to this effect, the rise in EBIDTA (28 per cent) and operating profit (88 per cent) excluding the one-time time settlements like water charges and payment of gratuity to employees reflected on the operational efficiency of the company.

While Nalco is rated as the lowest cost producer of alumina in the world by Wood Mackenzie, it aims to be the lowest cost producer of bauxite in the current fiscal overtaking a Venezuelan mine. The company achieved 100 per cent capacity utilisation at its bauxite mine, alumina refinery and recorded highest cast metal production in last five years at 0.426 million tonne.