Subdued alumina prices in international markets and higher input costs, especially that of coal, forced National Alumina Company (Nalco) to close the quarter ended September 30 with a net loss of Rs 28.35 crore. Its profit before tax for the quarter stood at Rs 47.17 crore.
The state-owned firm had posted a profit of Rs 510 crore in the corresponding period of FY19, riding on buoyant alumina prices after the US treasury had enforced curbs on UC Rusal. Nalco’s strategy to sell the whole of its surplus alumina in the spot markets instead of opting for long-term contracts paid off, helping the Navratna company to post a record profit of Rs 1732.4 crore in the last fiscal year.
This is a rare quarterly loss for Nalco, which known for its consistent profitability and has regularly figured among the top three foreign exchange earning public sector companies.
Nalco’s officials were not immediately available for comments on the company’s performance.
From the beginning of FY20, Nalco has been battling the international alumina price pressure. In the first quarter, Nalco could manage just a modest net profit of Rs 97.78 crore, bogged down by softening alumina prices. After peaking at over $600 per tonne, international alumina prices have halved to the level of around $300 a tonne on a year-to-date basis. Fragile alumina prices have squeezed realisations of the state-run aluminium producer while coming to the rescue of rival Vedanta that imports substantial quantum of alumina to power its smelters.
Over the years, alumina sales have been propelling Nalco’s profitability. The company is still struggling to turn a profit from its aluminium business, weighed down by escalating power costs as well as hardening costs of other critical inputs.
Nalco’s total income for Q2 of FY20, too, fell 22 per cent to Rs 2,420.11 crore.
Last month, Nalco was in the throes of an acute coal crisis that impacted its smelter operations at Angul (Odisha). More than 80 pots had gone offline as stir at coal mines of Mahanadi Coalfields Ltd (MCL) paralysed supplies. Nalco is fully dependent on MCL for sourcing coal and unlike its peers Hindalco Industries and Vedanta, does not import to offset any deficit.