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In a sluggish metal market, the aluminium major National Aluminium Company (Nalco) intends to maintain its profitability through product, volume and price variance while looking for cost cutting and entry into new markets.
“At present, the value chain has shifted in favour of those with mineral resources. Odisha has about 50 per cent of the country’s bauxite and Nalco owns a major chunk of these deposits in the state,” said Nalco’s new chairman cum managing director (CMD) TK Chand emphasising the advantageous position the PSU has to battle the metal slump.
Chand, who took charge as CMD of the company today, said, due to the global downturn, 60 per cent of the ferrous and non-ferrous companies have reported losses in the last fiscal. “Many of them might go bankrupt”.
Stating that Nalco has done reasonably well in these difficult times because of its mining assets, he outlined his plan to take the company to greater heights.
First, efforts will be made to improve governance system within the company by putting in place value-driven processes. Second, there will be two pronged strategy to improve the profitability of the company.
Elaborating, he said, as the margins are under stress, emphasis will be put on cost competitiveness by reducing procurement cost and consumption cost and aiming for waste elimination.
While the cost of bauxite mining at Nalco was one of the lowest in the world, he pointed out, there was significant jump in costs at the level of refining, smelting and casting processes. These areas will be looked into for further cost reduction through use of technology and operational efficiency.
Besides, the company will look for new markets to boost exports and sales realisation, he said and shared his experience at Rashtriya Ispat Nigam Ltd (RINL) where as director, commercial, he had found a new markets in East Africa boosting the steel PSU’s exports even as the shipping of steel from the country was dipping.
Chand also stressed on horizontal and vertical diversification of the products and said, this could take the turnover of the company from about Rs 8,000 crore now to bigger level. Nalco has already diversified into power generation. Capacities there could be ramped up.
Hoping for early allotment of new bauxite mine, Patangi, which may entail alumina capacity addition, he said, “New markets, expansion of customer base, product diversification and high-end products are some of the initiatives need to be taken immediately to make Nalco tide over the current market blizzard.”
