Nalco develops new business model to face sluggish market

Bhubaneswar: India’s leading aluminium producer Nalco on Wednesday said it has developed a new corporate plan under a new business model to withstand market onslaughts and keep the company afloat with profitability.

“Given the tough going in the market, Nalco, a leading foreign exchange earner of the country amongst the central public sector undertakings, has developed a new corporate plan that will withstand market onslaughts and keep it afloat with profitability,” Nalco CMD Tapan Kumar Chand said in a statement here.

He said the new business model will insulate National Aluminium Company Limited (Nalco) from the vagaries of the market.

It will also strengthen the company’s aluminium business by reducing the cost and increasing production through modernisation and brownfield expansion and upstream and downstream integration, he added.

Besides, the model envisages diversification into green power, nuclear power, rare metal like titanium, recovery of iron from red mud waste and merchant mining that are immune to downturns in the metal market.

“We have already formed a joint venture company with Gujarat Alkalies and Chemicals Limited for a caustic soda plant at Dahej in Gujarat. We are also exploring the opportunity to set up a greenfield aluminium smelter abroad, where energy would be available at a competitive price. The company has begun discussions with Iran, Oman, Qatar and Indonesia in this regard,” Chand added.

He said global aluminium production has out-passed consumption by 2.6 percent, leading to a surplus of roughly 1.4 million tonnes in 2015.

Slowdown in consumption in China resulted in dumping of surplus production of the communist country in the international market, leading to a steep fall in metal prices.

At present, aluminium prices are moving in a narrow band of around 1,500 dollars per tonne, much below the cost of production of primary producers. Seventy percent of the companies in the world have reported cash losses. Many smelters have been closed and many more are resorting to production cuts, the Nalco official said.

Talking about India, Chand said though consumption is increasing by 6 percent in the country, mainly on account of an increase in demand in electric and electronics sectors, increase in imports was a matter of serious concern as it exceeded 1.6 million tonne in 2014-15 and is continuously rising.

“Aluminium import constitutes 56 percent of the total domestic consumption of the metal, leaving only 44 percent of the market to domestic producers,” Chand said.