INTERVIEW-India's NALCO to meet targets, stocks a worry

MUMBAI, (Reuters) - India's state-run National Aluminium Co Ltd (NALCO) expects to meet its fiscal year sales targets for both alumina and aluminium by March, but it is concerned by a global inventory build-up, its chairman said. C.R. Pradhan said in an interview on Friday that NALCO was still confident of selling 360,000 metric tonnes of aluminium and 1.58 million tonnes of alumina in 2008/09. He added the company is also continuing its capacity additions despite cutbacks by global producers due to a deteriorating demand outlook. "We are feeling demand will remain same ... our material, when it is going to the market, is being sold. We are not having any stocks anywhere," Pradhan said. "But we are hearing that LME stocks are increasing, and that is a concern." Pradhan said NALCO's 50 billion rupee ($1.05 billion) capacity expansion at its mines, refinery and smelter would be completed by December, with increased output by April or May. "Our margins are coming down, though we are not making a loss," he said. "Our volumes have to increase, only then we can make our turnover or profit at the same level (as before)." The company is still suffering coal shortages, which earlier this year hampered production at units in the eastern state of Orissa, but it has managed to bring output back to normal by tapping private suppliers, Pradhan said. "The problem has minimised, but it is still there," he said. "We are (planning on) importing 200,000 tonnes of coal by March ... we will tender it." The firm was planning to issue a tender by January to source either the full amount of coal needed or a part of it. While a global credit crisis and economic growth worries have forced larger competitors to scale down production, Pradhan said NALCO had not felt the need to do so, so far. "We are a small player in the international market, so we have not been affected much ... as prices have come down, (buyers') purchasing capacity has increased. "Some kind of changes will be there, may be upward or downward, in the demand outlook ... we will know by February or March," Pradhan said. Pradhan said annual growth in domestic aluminium demand would remain unchanged at 7-8 percent. The company's business expansion plans in the local market were also progressing, with a join venture with BEML Ltd to make aluminium railway wagons likely to begin production by February or March, he said. Overseas projects planned for Indonesia and Iran are "going ahead" and feasibility reports are being prepared.