Nalco to raise euro 150 m for expansion

National Aluminium Company Limited (Nalco), the country's second-biggest producer of aluminium, plans to raise about � million (nearly Rs 900 crore) overseas debt to part finance the second phase of its expansion programme. This money will be utilised mainly to buy Rs 1,000-1,500 crore equipment from Europe, Nalco Chairman and Managing Director, C R Pradhan, said. He was addressing journalists after the public sector company's 26th annual general meeting on Friday. Pradhan said that the second phase of expansion will cost about Rs 5,000 crore and it is expected to be completed by December 2008. The capacity of the bauxite mines, post the expansion, will increase to 63 lakh tonnes, the alumina refinery capacity to 21 lakh tonnes and aluminium smelter capacity to 4.60 lakh tonnes. Captive power capacity will also increase to 1200 mw, Pradhan said. Internal funds The company hopes to meet most of the cost of the expansion from internal sources. It has a cash surplus of Rs 3,563 crore as of March 31, 2007 which has been placed is in short term deposits. On the rationale for raising funds overseas, Pradhan said the funds being raised overseas will be at a much lower rate, which will result in substantial cost savings. Nine banks and merchant bankers had participated in the expression of interest, of which seven were shortlisted after the qualification process. All seven submitted their offers last week, detailing the rate of interest and securities required. Nalco is still evaluating the offers. But in a preliminary evaluation State Bank of India and Axis bank appear to be ahead of the others. To acquire smelter Pradhan said that the company was also examining proposals to set up a smelter overseas through a joint venture or through acquisitions. This was to add value to the surplus 12 lakh tonnes of alumina that is expected to be available after the second phase of expansion. Talks are going on with some companies, but nothing has been finalised yet,� Pradhan said. Nalco has received proposals from companies in Indonesia and Tajikistan that have smelters which they are unable to manage. We are looking for a greenfield smelter where we can get cheap power. If we get power at less than Re 1 a unit only then we will take over a smelter,� Pradhan explained. Export revenues hit Nalco's export revenues are down by Rs 120 crore monthly since April 2007 on account of the appreciating rupee. Export earnings amounted to Rs 2,585 crore in 2006-07, during which period it earned Rs 2,381 net profit on total sales of 6,515 crore, the highest ever for the company. Nalco announced a 75 per cent dividend for the last fiscal. Pradhan informed that the company was pursuing the matter of new bauxite mining leases at Gandhamardan and allotment of Pottangi bauxite deposits and Jerrela bauxite deposits in Andhra Pradesh. While the formalities for Pottangi are nearly over, the government has asked the state government for its position on Gandhamardan. Meanwhile, the Centre has allotted to Nalco the Utkal-E coal block which has reserves of 70 million tonnes. The mine plan for the block has been approved by the coal ministry. Environmental clearance is awaited. Mining operations are scheduled to commence by end 2008.