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Informist, Thursday, May 22, 2025

--NALCO: Operating at almost 100% capacity in all facilities

--CONTEXT: Comments by NALCO's mgmt in post-earnings analyst call

--NALCO: Expect commercial output from expanded alumina facility by June

--NALCO: Seek to cut alumina output cost by INR 1,000-INR 1,500 per tn

--NALCO: Spent INR 35 bln on alumina facility expansion

--NALCO: 90-95% of sales going to the export market

--NALCO: Total coal needs at 7.2 mln tn, to mine 4 mln tn from Utkal-D block

--NALCO: Linkage coal at INR 2,000/tn, our coal costs up to INR 1,600/tn

--NALCO: To complete alumina refinery expansion within approved budget

--NALCO: To increase alumina output, sales by 2 mln tn each in FY26

--NALCO: To spend INR 17 bln in FY26, INR 20 bln in FY27 as capex

--NALCO: Employee count at 4,800, to cut count by 250/year for 2-3 years

--NALCO: Hope to begin output from Pottangi bauxite mine in June 2026

By Sunil Raghu and P. Madhu Kumar

AHMEDABAD/MUMBAI - National Aluminium Co. Ltd. plans INR 37 billion capital expenditure over the next two years and start commercial operations at expanded alumina refinery and Pottangi bauxite mines from June 2026, the company's management said in a post-earnings analyst call Thursday.

Of the planned INR 37 billion capex, INR 17 billion will be for 2025-26 (Apr-Mar) and INR 20 billion in FY27. Of its FY26 capex, INR 11 billion will be on expansion projects, the management said. Nalco is currently working on expansion of its Pottangi bauxite mines, fifth stream of alumina refinery in Odisha, expansion of its aluminium smelter plant, setting up a 15 megawatt wind power in Tamil Nadu and a proposed 7 MW solar power project.

Nalco seeks to begin commercial operations at fifth stream of 1 million tonnes per annum at its 2.275-million-tonnes-per-annum alumina refinery by June 2026. With bauxite from Pottangi mines feeding in to this refinery, the company plans to open the new mine and raise capacity of this 3.5-million-tonnes-per-annum mine by additional 1 million tonnes around that time.

Pottangi bauxite mines have reserves of 111 million tonnes. The company's management said it has already spent nearly 75% of the budgeted amount--around INR 35 billion--on alumina refinery expansion. Post expansion, the refinery will help cut down alumina production costs for the company by at least INR 1,000-1,500 per tonne from INR 22,000 per tonne.

The government-owned aluminium company reported a 2.05 times on-year rise in net profit to INR 20.78 billion for Jan-Mar, beating Street view of INR 14.26 billion by a wide margin. Contributing to this strong bottom line growth was a 47% on-year increase in revenue from operations at INR 52.68 billion, which was the highest growth in 11 quarters. The reported revenue was also above analysts' estimate of INR 47.15 billion.

For the full year 2024-25 (Apr-Mar), NALCO's net profit rose 2.6 times to INR 53.25 billion on the back of a 28% rise in revenue from operations to INR 167.88 billion. The company said it achieved highest-ever bauxite excavation of 7.65 million tonnes, and highest-ever domestic metals sale of 455,000 tonnes in FY25.   

On operational front, the company said all its plants are working at nearly 100% capacity and 90-95% of its alumina output is currently exported. Going forward, it hopes to increase output and sales from its alumina refinery by 2 million tonnes per annum each. Of this, it plans to sell 50,000-80,000 tonnes in the domestic market, which was "much less" in FY25. The company also plans to increase production of captive coal to 4 million tonnes in FY26, up from 2.8 million tonnes in FY25. The increase would come from its Utkal D&E coal mines, the company's management said.

The company consumes nearly 7.2 million tonnes of coal to generate captive power. It sources the remaining quantity from Coal India Ltd. or from open markets via auction. Increased production of coal would help the company cut its coal costs, as captive coal costs are at INR 1,600 per tonne, compared to linkage coal bought from outside at INR 2,000 per tonne. 

The company, which currently has an employee strength of 4,800, also plans to cut its staff count by 250 every year on a net basis, at least for the coming 2-3 years. The company's employees' costs fell 19.38% on year to INR 4.1 billion in the March quarter and 12.2% in FY25 to INR 17.86 billion.

At 1520 IST, shares of NALCO were trading at INR 184.81 per share on the National Stock Exchange, up 1.7%.
 

End

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

Edited by Vandana Hingorani

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