Nalco to become debt-free soon

State-owned National Aluminium Company Ltd (Nalco) plans to retire all its debts by the end of 2004-05 (April-March), a senior company official said Monday.

The company is also planning to invest around Rs 200 crore into its maiden coal-mining venture in Orissa, the official said.

"We are targeting to become a zero-debt company by the end of this financial year," the official said.

Under the plan, the company would phase out outstanding debts to the tune of RS 654 crore.

Among the debts Nalco plans to phase out are the Rs 644 crore worth of secured debentures raised in 1999 under a capital-restructuring plan. Under the plan, the company had diluted its equity base from Rs 1,288 crore by half, converting half of its equity into debt. Nalco had raised bonds worth Rs 644 crore from the government under the debt-equity swap.

The aluminium major, which recently bagged a coal block in Talcher, Orissa, plans to mine coal for its captive power plant in the state.

The entire Rs 200 crore for the green-field venture would be raised through internal resources, the official said.

The company is expected to save 200-300 rupees for every tonne of coal once the venture starts. Nalco currently pays around Rs 1,100 per tonne for purchasing coal from Coal India Ltd. and others.

The company is also adding 240 mw of captive generation capacity under its second phase of expansion.

Last month, Nalco got the Cabinet approval for its second phase of expansion, which will cost over Rs 4,000 crore. The expansion project would raise Nalco's smelter capacity to 0.46 million tonnes per annum and alumina capacity to 2.1 million tonne.

Currently, Nalco is the country's largest aluminium producer with a metal production capacity of 0.34 million tonne, while its alumina production capacity has been pegged at 1.57 million tonne.