Nalco plans new business model to rake in Rs 9.35 bn of net profit in 3 yrs

Nalco is adding the fifth stream to its existing alumina refinery at Damanjodi (Odisha) at a cost of Rs 5.54 bn, an initiative set to boost the company's net profit by Rs 2.75 bn

National Aluminium Company (Nalco) aims to come up with a new business model that promises to bolster its net profit by Rs 9.35 billion after three years.

The additional net profit would be driven by an array of initiatives planned by Nalco from downstream to upstream and backward integration businesses.

Nalco’s chairman & managing director T K Chand said, “We are introducing a game-changing business model that will bring additional Rs 9.35 billion net profit to the company. The model provides for focusing operations of Utkal-D (coal block) at the end of second quarter of 2019, commissioning of one million tonne of alumina refinery, setting up of wire rod mill 3, bringing into steam caustic soda plant, coal tar pitch plant, etc.”

The opening of Utkal-D captive coal block is poised to bring in a net profit of Rs 4.6 billion. Separately, Nalco is adding the fifth stream to its existing alumina refinery at Damanjodi (Odisha) at a cost of Rs 5.54 billion, an initiative set to boost the company’s net profit by Rs 2.75 billion. The new stream is expected to get into operations by April 2021.

To secure upstream integration, Nalco is proceeding with a caustic soda plant through a joint venture (JV) with Gujarat Alkalies & Chemicals Ltd at Dahej at an investment of Rs 19.9 billion. The plant, to be commissioned in 24 months, would shield Nalco from vacillating prices of caustic soda, a key ingredient in alumina making. Also, the caustic soda unit is projected to spell Rs 800 million extra net profit for Nalco.

Nalco’s other planned projects are tipped to garner incremental net profit for the company- a coal tar pitch plant (Rs 800-100 million), wire rod mill (Rs 600 million) and a cashless model (Rs 400 million) to be implemented at the Angul aluminium park where the navratna company is the co-promoter along with state-controlled Odisha Industrial Infrastructure Development Corporation (Idco). For downstream units at the aluminium park spread over 240 acres, Nalco has assured supply of 50,000 tonnes of molten metal and ingots each year.

The coal tar distillation plant is to be set up by Nalco jointly with steel PSU Neelachal Ispat Nigam Ltd (NINL). The raw material would be sourced from NINL’s coke oven plant at Kalingangar, home to a cluster of steel plants.