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Nalco eyes net profit from aluminium biz by fiscal end, leans on LME prices

Metal News - Published on Wed, 17 Oct 2018

Image Source: Business Standard
Business Standard reported that National Aluminium Company is clawing towards profitability in aluminium business. Historically, alumina sales have been propelling the company's profits, with 46 per cent share in gross turnover and contributing nearly 80 per cent to its Ebitda (earnings before interest, taxes, depreciation and amortisation). Mr TK Chand chairman & managing director of Nalco said that “We expect to turn profits from aluminium segment by the end of this fiscal if the current market trends continue. Assuming an average LME (London Metal Exchange) of USD 2,100 per tonne, including premium and no significant cost-push factor, we should be able to make profits. Already, Nalco has turned Ebitda positive in aluminium vertical in the first two-quarters of this fiscal. This is opposed to our performance in last fiscal when Nalco posted Rs two billion loss from aluminium operations.”

As per Nalco's forecasts, LME prices would stay range bound in USD 2,050 to USD 2,100 per tonne. Prices of key ingredients in alumina refining like caustic soda and carbon are firm but are expected to remain under control.

To ramp up profitability, Nalco is making concerted efforts to prune cost of its metal production. The central PSE is going for brownfield expansion of its smelter at Angul, adding 0.5 million tonnes in annual capacity. The expanded capacity to be achieved with minimal incremental manpower is expected to be commissioned in three years. Nalco is also hopeful of commencing mining from its captive coal block later in this fiscal.

Mr Chand believes, the two steps would be a game changer. He said that “After our brownfield expansion is through, it will save our wage costs by seven to eight per cent. The smelter expansion coupled with captive coal mining will make Nalco's aluminium business extremely competitive.”

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Posted By : Rabi Wangkhem on Wed, 17 Oct 2018
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