India's Nalco Achieves Record Domestic Aluminum Sales of More Than 270,000 Tons in 2008-09

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Researched by Industrial Info Resources (Sugar Land, Texas)--National Aluminum Company Limited (BSE:532234) (Nalco) (Bhubaneswar, Orissa) has gone against global trends by recording its highest-ever domestic sales of aluminum in the past fiscal year, 2008-09. The company sold 271,274 tons of aluminum during the year. The previous record was set in 2006-07, when Nalco achieved domestic sales of 263,000 tons of aluminum.

Nalco, India's leading manufacturer of aluminum and alumina, reported record levels of production and sales in the majority of its interests. The only blot on the landscape is the company's export sales figure for aluminum, which fell from 101,723 tons in 2007-08 to 82,314 tons in 2008-09.

Production of bauxite, alumina hydrate and aluminum recorded increases over the previous year's levels. Production of bauxite increased from 4.68 million tons to 4.7 million tons; aluminum increased from 359,213 tons to 361,262 tons, and production of alumina hydrate increased from 1.575 million tons to 1.576 million tons. Sales of alumina hydrate rose from 887,276 tons in 2007-08 to 888,581 tons in 2008-09.

Nalco focused on the more financially rewarding domestic market than the export market in 2008-09, which resulted in the lowered export figures. Low commodity prices, which fell by more than 70% during the last six months, also had a detrimental effect on sales figures. However, with large reserves of bauxite, access to captive power and low labor costs, Nalco and other Indian manufacturers have been able to retain their competitiveness by being positioned among the lowest-cost producers of aluminum in the world.

In May of last year, Nalco was granted the "Navratna" status by the Department of Public Enterprise. The "Navratna" status is conferred on companies that achieve a high score based on various parameters such as net profit, net worth, manpower cost, production cost, profits and capital employed. In addition, a company must have at least four independent directors to be awarded the "Navratna" status.

In June 2008, Nalco announced expansion plans of more than $8 billion scheduled for the following five years, in both domestic and overseas developments, including smelter and power projects in Indonesia, South Africa and Iran, and greenfield projects in India.

In India, Nalco plans to upgrade and extend existing facilities in Orissa by increasing the bauxite-mining capacity to 90,000 tons per year, alumina-production capacity to 30,000 tons per year and aluminum-smelting capacity to 6,300 tons per year. In addition, the firm plans to set up a 5,000-ton-per-year aluminum smelter and a 1,260-megawatt (MW) coal-fired power station in the Ib Valley area of the Jharsuguda district in Orissa. Negotiations are under way with the government of Andhra Pradesh to establish a 42,000-ton-per-year bauxite mine and a 14,000-ton-per-year refinery in the state.

Nalco has signed a memorandum of understanding with Iran for setting up a 3,100-ton-per-year aluminum smelter. The firm has also signed a memorandum of understanding with the Indonesian government to establish a 5,000-ton-per-year smelter and a 1,250-MW power plant and is in discussion with the South African government for similar projects.

In an effort towards diversification, Nalco signed an agreement with BEML Limited (BSE:500048) (Bangalore) to collaborate on a project to produce aluminum railway wagons and possibly aluminum railway coaches at a later date.

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