Companies

Delay in operating Utkal coal block to hit Nalco’s performance

M. Ramesh Chennai | Updated on March 12, 2018 Published on May 24, 2012

Public sector company National Aluminium Company Ltd (Nalco) reported a lower net profit last year mainly due to the problems it faced in coal supplies.

After an analysts conference call, the predominant view of many analysts is that the bearish trend would continue into the current year, too.

For 2011-12, Nalco reported a net profit of Rs 850 crore compared with Rs 1,070 crore for the previous year. The company has been facing coal supply issues which affected its operations in April-December 2011.

Pointing out that Nalco has been getting its coal supplies from Mahanadi Coalfields, which has not been supplying the fuel regularly, a report of Angel Broking said that if such a situation continues it would increase Nalco’s dependence on imported coal, “which is very expensive”.

It was expected that the ‘Utkal coal block’ project would give Nalco a shot in the arm.

There have been delays in the project. “However, there is lack of clarity on the completion of other regulatory formalities in the near term. Hence, production from this block is unlikely to start in 2012-13 in our view,” the report said.

It says that in the current year, it expects Nalco to operate its aluminium smelters at 70 per cent capacity utilisation levels.

Although Nalco has captive bauxite mines, the cost of aluminium production remains very high on account of high power costs.

Nalco did not reply to an e-mail query from Business Line seeking its comments on the report.

Another report, of Edelweiss Securities, quoted Nalco’s management as saying that it did not expect significant increase in aluminium sales in the current financial year.

Both Angel and Edelweiss said they expect a dip in Nalco’s net profit for the current year.

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Published on May 24, 2012
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