Price Setback Unlikely To Dent Nalco

According to a UTI Securities report on the aluminium industry and key Indian players, Nalco may not witness any further disinvestment from the government so the reduction of equity and conversion of equity to preference shares become improbable.

The company, which is the largest integrated aluminium producer in Asia and which also has the highest market share within the industry (of 33 per cent), is expected to improve its operating efficiency with each year.

With the aluminium prices at the London Metal Exchange (LME) slated to go up and a distinct shortfall of the metal existing in the global market, the industry is likely to see Nalco as an important aluminium producer in the world in 1997-98, the report said.

In the current line of activity, the company is embarking on an expansion plan at a total capital cost of Rs 3,360 crore. The integrated increased capacity will be on stream by the turn of the century. Principal sources of funding the expansion will be through internal accruals.

During the next two years, the company is expected to have internal accruals of up to Rs 1,400 crore, the report said.

The company may look to part finance the project if the internal accruals are not sufficient to fund the total expansion plan, the report states. According to independent sources, Nalco has yet to decide on this issue and a final plan could come about by November.

Nalco plans to undertake an expansion to increase the capacity of its refinery to 1.57 million tonnes per annum from the present 0.8 million.