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Nalco sees lower profitability on rising input costs

Nalco sees lower profitability on rising input costs
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First Published: Tue, Jul 26 2011. 09 21 PM IST
Updated: Tue, Jul 26 2011. 09 21 PM IST
New Delhi: State-run National Aluminium Co (Nalco) expects a 10%-12% rise in turnover this fiscal as new capacities gets added, but rising raw material costs are seen denting profitability, its chairman said on Tuesday.
“The input cost on raw material and coal have gone up during the current year, which will reduce margins,” B.L. Bagra, chairman and managing director of Nalco told Reuters.
“Our profit may go up by 4%-5% this fiscal.”
Nalco expects price realisations on aluminum to increase by 7%-8% in the fiscal year to March 2012 to an average of $2,500-$2,600 per tonne.
The country’s third-largest aluminum maker is also in talks with Indonesian state-run mining company PT Antam for setting up a 500,000-tonne aluminum smelter and a 1,260 mega watts captive power plant.
“Our talks are positive...,” said Bagra, adding Nalco could invest Rs 2,500-2,800 crore ($565-$633 million) in the $3.8-billion joint venture.
Bagra expects India’s aluminium demand to rise by 12%-13% in this fiscal from 1.6 million tonnes a year earlier, spurred by demand from power and real estate sectors.
Nalco sees global aluminium demand to grow 3%-4%, powered mainly by China and India, with some demand seen from Europe and the United States.
At 1453 GMT, aluminium was trading about 1% higher at $2,640 per tonne on the London Metal Exchange (LME), after gaining 6.3% since January.
Nalco’s joint venture with Nuclear Power Corp. for a 1,400 MW nuclear power plant in western Indian Gujarat state, has been sent for government approval.
“If every thing goes fine by 2014 installation should be completed and production should start in 2015,” Bagra said. Nalco will invest Rs 1,700 crore in the venture.
Bagra said “wild valuations” have thwarted the firm from pressing on with plans to buy uranium mines, one of the raw materials for nuclear power, in Namibia.
“We have been trying to get some minerals in Africa, Namibia, Guinea, or Latin America—particularly copper, because of certain procedural uncertainty we are not able to make any concrete progress.”
Shares of Nalco on Tuesday ended more than 1.5% lower in a weak Mumbai market.
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First Published: Tue, Jul 26 2011. 09 21 PM IST