National Aluminium Company

It gives me immense pleasure in presenting this 27th Annual Report of
 your Company along
 
 with audited statement of Accounts and Auditors Report, on behalf of
 the Board of Directors.
 
 NAVRATNA STATUS
 
 At the outset, your Directors are pleased to inform you that in
 recognition of your Companys ability to perform and grow into a
 significant contributor to the economic development of the Nation, its
 competitive advantage and capacity to turn into a global giant, the
 Government of India has accorded Navratna status to your Company. On
 entering the prestigious Navratna Club, the Board of the Company has
 been vested with enhanced managerial and commercial autonomy that will
 facilitate faster implementation of ambitious growth plans.
 
 PERFORMANCE HIGHLIGHTS PRODUCTION
 
 You will be pleased to learn that the Company exceeded the targets set
 for production of alumina and aluminium for the year 2007-08. The
 aluminium smelter has achieved the highest ever cast metal production
 since inception with capacity utilization of 104%. The bauxite
 production has improved compared to previous year, though still below
 the rated capacity, due to snags in the conveyor system and repeated
 belt dislodgements. Action has been taken to prevent recurrence of such
 problems. The target for generation of electricity could not be
 achieved due to less supply of coal by colliery to the Captive Power
 Plant. The details of production are given below:
 
 Product                    Unit     2007-08     2006-07
 
 Bauxite                     MT     46,84,684  46,23,278
 
 Alumina Hydrate             MT     15,75,500  14,75,200
 
 Aluminium                   MT      3,60,457   3,58,734
 
 Electricity (Net)           MU         5,609      5,968
 
 MARKETING
 
 You will be pleased to know that your Company achieved the highest ever
 sale of metal, Rolled Products and Special Grade Alumina/ Hydrate
 during the year. With launching of NALCO Special Products Alumina
 (NSPL)-102 in the overseas market through export of 41 MT to Vietnam
 during the year, yet another milestone was reached.
 
 Tostrengthenthemarketingefforts,anewstockyardinChennai was opened
 during the year. MOUs were signed with 151 domestic customers for sale
 of metal during 2007-08 as against 118 MOUs during the previous year.
 The domestic sales of metal were effected from the smelter plant at
 Angul and nine stockyards at Kolkata, Baddi, Jaipur, Faridabad,
 Bhiwandi, Silvassa, Bangalore, Chennai and Visakhapatnam.
 
 The sales break-up is as follows:                (Figures in MT)
 
 Particulars                                2007-08           2006-07
 Export
 
 Alumina                                   8,59,943          7,73,573 
 
 Special Alumina                                 41             -
 
 Aluminium                                 1,00,847            92,678   
 
 Rolled Products                                876               444
 
 Domestic
 Alumina & Hydrate                           11,307            10,921
 
 Special Hydrate                             11,700             8,222
 
 Special Alumina                              4,241             2,858
 
 Zeolite-A                                    4,482             7,156
 
 Aluminium                                 2,51,612          2,63,494
 
 Total Metal Sale                          3,53,335*         3,56,617*
 
 Total Chemical Sale                       8,91,714          8,02,730   
 
 -The metal sale excludes 4,642 MT (previous year 2,035 MT) consumed
 internally for project and Production activities.
 
 FINANCE
 
 The Company has achieved a turnover of Rs. 5,576 crore, as against the
 turnover of Rs. 6,354 crore during the previous year and Profit After
 Tax stands at Rs. 1,632 crore, as against Rs. 2,381 crore in the
 previous year. The decline in sales realization and net profit during
 the year, compared to previous year, is mainly due to lower sales
 realization from export of alumina, substantial appreciation of rupee
 against US Dollar. Your Company has achieved an export earning of
 Rs.2,135 crore as against Rs.2,585 crore achieved during the previous
 year.
 
 The summarized financial results as compared to previous
 year are furnished below :              
 
                                         (Rs. in crore except EPS)
 
                                          2007-08      2006-07
 
 Net Sales                                  4,989        5,940
 
 Other Income                                 587          414
 
 Total Income                               5,576        6,354
 
 Gross Margin                               2,754        3,942
 
 Less: Interest & Depreciation                287          322
 
 Profit Before Tax (PBT)                    2,467        3,620
 
 Provision for Taxes                          835        1,239
 
 Profit After Tax (PAT)                     1,632        2,381
 
 Earning Per Share (EPS) in Rs.             25.32        36.96
 
 DIVIDEND AND APPROPRIATIONS
 
 As you are aware, your Company paid an interim dividend of 45% in
 February, 2008. Your Directors believe that growth in shareholders
 value lies in capacity expansion and backward and forward integration.
 Keeping this in view and in accordance with your Companys policy of
 balancing dividend pay-out with the requirement to deploy internal
 accruals for its growth plans, your Directors have now recommended a
 final dividend of 15%, taking the aggregate dividend for the year to
 60%.  Your Directors propose to transfer Rs.1,200 crore to General
 Reserve Account from the Profit & Loss Account.
 
 PRESIDENTIAL DIRECTIVES
 
 As per Presidential Directives, steps have been taken for
 recruitment/promotion of Scheduled Caste/Scheduled Tribe (SC/ST)
 candidates. Your Company is also complying with the provisions of the
 Persons with Disabilities Act, 1995.
 
 As on 31.03.2008, out of 7,413 employees (including trainees) on
 Companys roll, there were 1,181 (15.93%) SCs, 1,330 (17.94%) STs, 701
 (9.46%) OBCs and 71 (0.96%) physically challenged persons. Thus, every
 third employee of your Company belongs either to SC or ST category. The
 total number of lady employees in your Company stands at 319.
 
 INDUSTRIAL RELATIONS
 
 Employee involvement through encouragement of more suggestions on
 production related issues, formation of quality circles, fostering of
 communication channels and training, has been adopted continuously to
 further the environment of mutual co-operation and trust, for
 increasing production and productivity.
 
 In a multi-union scenario, each of the Units of your Company has a
 recognized Union as per verification of membership through secret
 ballot. The structured interactions with the recognized Unions
 continued on a regular basis on the matters of production,
 productivity, discipline and work culture, besides resolving various
 demands and employee related issues.
 
 The industrial relations scenario of your Company has remained by and
 large peaceful. The total mandays lost due to the total mandays
 available during the year was only 0.09% as against 0.74O/0 last year
 and the same was mainly due to obstruction by local land displaced
 villagers at Damanjodi sector, demanding employment for dependants of
 LDP employees.
 
 VISIT BY PARLIAMENTARY COMMITTEES
 
 The following Parliamentary Committees visited the corporate office
 during the year and meetings were held with the Management of the
 Company:
 
 - The Standing Committee on Industry on 8th and 9th June, 2007.
 
 - Committee on Government Assurances, Rajya Sabha on 8th and 9th
 October, 2007.
 
 - Standing Committee on Coal and Steel on 18th and 19th January, 2008.
 
 CORPORATE SOCIAL RESPONSIBILITY
 
 Your Company is among the very few Central Public Sector Undertakings
 having an approved peripheral development policy, under which it
 allocates up to 1% of its net profit every year on various development
 works for the socio-economic improvement of the people of peripheral
 areas. An amount of Rs.23.81 crore was allocated for peripheral
 development activities, as part of meeting Corporate Social
 Responsibilities of the Company for the financial year 2007-08.
 Rehabilitation and Peripheral Development Advisory Committees (RPDAC)
 have been constituted by Government of Orissa under the Chairmanship of
 respective Revenue Divisional Commissioners.  Other members of this
 Committee of the respective region include senior Government officials
 of the district, elected public representatives to Parliament, Assembly
 and Zilla Parishad and senior officers of your Company. These
 Committees prepare the annual peripheral development projects for the
 respective regions and also monitor their implementation.
 
 Corporate Social Responsibility activities undertaken by your Company
 during the year include:
 
 Smelter & Power Complex
 
 - Provision of mobile health care service continued through doctors and
 para-medical staff, carrying medicines in van to 38 peripheral
 villages.
 
 - OrganisingAnimal Health Camps in the peripheral villages.
 
 - Providing drinking water to the villagers. Besides augmentation of
 water supply to 11 peripheral villages in the recent past, another
 project of permanent water supply system for 13 villages at an
 expenditure of Rs.5.13 crore is in the final stage of commissioning.
 Further, tubewells have been dug and village ponds renovated to
 increase the water storing capacity. Drinking water was supplied by
 tankers to the water scarcity villages during summer months.
 
 Mines & Refinery Complex
 
 - Construction of short/stay Home Building for destitutes (Swadhara).
 
 - Distributionoffoodmaterials,mineralwaterandmedicines during the
 out-break of gastro-enteritis at Laxmipur and Dasmanthpurarea.
 
 - Organising public awareness programmes for the prevention of
 gastro-enteritis, immunization of catties in the district for the
 prevention of the animal disease- Anthrax.
 
 - Organizing the annual tribal cultural festival of Koraput
 PARAB-2007.
 
 Corporate Office
 
 - One Mobile Medicare Unit Van was provided to Help- Age India,
 Bhubaneswar for providing free medical treatment to the elderly poor
 people residing in the surrounding villages of Cuttack and Bhubaneswar.
 
 - Sponsoring different State level cultural functions to promote the
 Art and Culture.
 
 - Distribution of relief materials at the flood affected areas of
 Jaleswar and Jajpur, besides donating relief material (LDPE sheets)
 through the State Relief Commissioner.
 
 AWARDS & RECOGNITIONS
 
 Your Company received the following awards/prizes during the year under
 review, which is an ample testimony for the excellent performance of
 your Company in various fields:
 
 - Top Export award of CAPEXIL for the year 2006-07, for the record
 20th year in succession.
 
 - Best Environment Management and Accident Prevention, Safety
 Management and Communication System Award for the year 2006 instituted
 by Director,.
 
 Factories and Boiler, Orissa, bagged by Captive Power Plant.
 
 - Industrial Trade Quality Achievement award, for the highest-ever
 production and export performance during 2006, instituted by the
 Council for Industrial & Trade Development (CITD).
 
 - 2nd prize for Best Practices in Safety, Health and Environment at
 Enterprise Orissa 2007, organized by the CII, was bagged by Captive
 Power Plant.
 
 Engineering Export Promotion Council, Eastern Regions Gold Trophy, as
 Top Exporter in the Large Enterprise Category, for outstanding
 contribution to engineering exports during the year 2005-06.
 
 - 6 prizes including the overall best performance prize during the
 annual Joint Mines Safety Week 2007 of NALCO- NMDC were bagged by
 Panchpatmali Bauxite Mines.
 
 - Shri Gopabandhu Dash of Smelter Plant and Shri Parsuram Swain of CPP
 of your Company have been adjudged as the recipients of Shram Vir
 Award and Shram Shree Award of Government of India, respectively.
 
 GROWTH PLANS
 
 The work on 2nd phase expansion programme at an estimated cost of
 Rs.5,003 crore (at March, 2007 price level) is in full swing. The
 annual capacities of the various project segments and those after 2nd
 phase expansion are given below:
 
 Project                     Unit      Present    Capacity after 2nd
 Segment                               Capacity      Phase expansion
 
 (a)  Bauxite Mines            MT      48,00,000          63,00,000
 
 (b)  Alumina Refinery         MT      15,75,000          21,00,000
 
 (c)  Aluminium Smelter        MT       3,45,000           4,60,000
 
 (d)  Captive Power Plant      MW            960              1,200
 
 Overall Progress
 
 Project Segment        Actual Progress (July, 2008)
 
 (a)   Mines & Refinery                        84%
 
 (b)   Smelter                                 82%
 
 (c)   CPP                                     85%
 
 Orders have already been placed for 141 packages out of 155 packages of
 Mines & Refinery 128 packages out of 139 packages for Smelter and 27
 packages out of 28 packages for CPP. Enquiries for balance packages
 have been issued for each segment and are under process. The project is
 scheduled to be commissioned in December, 2008.
 
 Coal Mine
 
 Your Company has been allotted UTKAL-E Coal Block, having a reserve
 of around 70 million MT for its new units at Captive Power Plant.
 Considering the present progress, it is expected that the mining would
 start by December, 2009.
 
 MOU PERFORMANCE
 
 Your Companys performance has been rated Excellent in the evaluation
 of the Memorandum of Understanding (MOU) signed with Government of
 India for the year 2007-08.
 
 RAJBHASHA
 
 During the year under review, efforts continued for promoting
 progressive use of Rajbhasha (Hindi) in day-to-day official
 correspondence of your Company.
 
 On the occasion of Quami Ekta Week, two Hindi Kavi Sammelans were
 organized, one at Corporate Office, Bhubaneswar and another at Mines &
 Refinery Complex, Damanjodi with participation of poets of National
 fame.  Hindi Week/Fortnight was observed at all the offices and units
 of your Company in September, 2007. On this occasion, Hindi
 competitions like essay, calligraphy, debate, self-composed poetry,
 letter-writing, noting, dictation and slogan etc. were organized in
 which large number of employees participated.  On the occasion of Hindi
 Week, Hindi magazines, Akshar at Corporate Office, and Teen Suman at
 Damanjodi unit were published, in which selected articles, poems and
 stories written in Hindi by employees were published.
 
 Nomination of employees of your Company for Hindi typing and
 stenography and Hindi computer training under Hindi Teaching Scheme
 were made as in previous years. As there is no centre of Hindi Teaching
 Scheme of Government of India at Angul and Damanjodi, Hindi training in
 these sectors is being imparted through correspondence courses and by
 own arrangements.
 
 Bilingual computerized forms used in the office have been prepared and
 uploaded at Intranet site of the Company for use by all. For
 facilitating Hindi notings on files, a booklet and leaflet of
 English-Hindi short notings were published and distributed.
 
 VIGILANCE
 
 The main emphasis of Vigilance Department of your Company is prevention
 and detection of corruption and system improvement. Through surprise
 checks, regular inspections, sample tests, CTE type intensive
 examination of Works, Purchase and Service Contracts etc.
 irregularities are brought to the notice of Competent Authorities for
 necessary corrective action. As advised by Central Vigilance
 Commission, e-procurement, e-payment, e-tendering, etc. are being
 pursued and progress for complete implementation are being followed up.
 A comprehensive Vigilance Manual has been published and distributed
 among the employees for hands-on knowledge on vigilance. Seven training
 sessions were conducted at different units of the organization for
 sensitizing employees on vigilance.
 
 CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
 
 A statement giving details of the Conservation of Energy and Technology
 Absorption is placed at Annexure -I hereto and forms part of this
 report.
 
 FOREIGN EXCHANGE EARNING AND OUTGO (ON CASH BASIS)
 
 Foreign Exchange Earnings of your Company for the year under review was
 Rs.2,095 crore as against Rs.2,576 crore in the previous year 2006-07.
 
 Foreign Exchange Outgo of your Company for the year 2007-08 was Rs.719
 crore as against Rs.336 crore in the previous year 2006-07.
 
 PARTICULARS OF EMPLOYEES U/S 217(2A) OF THE COMPANIES ACT, 1956
 
 None of the employees of your Company was in receipt of remuneration of
 Rs.2 lakh per month or Rs.24 lakh per annum during the year 2007-08.
 
 STATUS OF LISTING IN STOCK EXCHANGES
 
 The equity shares of your Company continued to be listed on Bombay
 Stock Exchange Limited, Mumbai (BSE), and National Stock Exchange of
 India Limited (NSE). The listing fee has already been paid to these
 Stock Exchanges.
 
 DIRECTORS RESPONSIBILITY STATEMENT
 
 Pursuant to the provisions of Section 217(2AA) of the Companies Act,
 1956, your Directors hereby confirm:
 
 - that in the preparation of the annual accounts, the applicable
 accounting standards have been followed along with proper explanation
 relating to material departures;
 
 - that the directors have selected such accounting policies and applied
 them consistently and made judgments and estimates that are reasonable
 and prudent so as to give a true and fair view of the state of affairs
 of the Company at the end of the financial year and of the profit of
 the Company for that period;
 
 - that the directors have taken proper and sufficient care for the
 maintenance of adequate accounting records in accordance with the
 provisions of Companies Act, 1956 for safeguarding the assets of the
 Company and for preventing and detecting fraud and other
 irregularities;
 
 - that the directors have prepared the annual accounts on a going
 concern basis.
 
 IMPLEMENTATION OF THE RIGHT TO INFORMATION ACT, 2005
 
 Your Company, as a responsible corporate citizen and as a Public
 Authority, believes in providing access to information under its
 control to the citizens of India under the provisions of the Right to
 Information Act, 2005 (RTI Act).
 
 In compliance with the mandatory provisions of the RTI Act, your
 Company appointed one Public Information Officer(PIO), ten Assistant
 Public Information Officers
 
 (APIOs) and one Appellate Authority(AA). Your Company, compiled
 information under 17 different templets/manuals for voluntary/suo-moto
 disclosure as required under Section 4(l)(b) of the Act and hosted the
 same on the Companys website, www.nalcoindia.com. The information so
 published is being regularly updated.
 
 Detailed Internal Procedure has been prepared and circulated for
 effective implementation of RTI Act for creating awareness among the
 employees about the various provisions of the Act and the procedural
 aspects thereon, Text of RTI Act, list of PIO, APIOs and AA has been
 hosted in the Companys intranet site.
 
 Your Company has also developed an user friendly web enabled
 information seeking system for handling and processing of information
 requests electronically. An exclusive e-mail ID
 right2information@nalcoindia.co.in has been created for the benefit of
 information seekers, who can send their information requests through
 e-mail as advance intimation to the Company.
 
 CORPORATE GOVERNANCE
 
 Good Corporate Governance means adoption of best ethical business
 practices which also ensure the Company to be within the regulatory
 frame work. The adoption of such corporate practices ensures
 accountability of the persons in charge of the Company on the one hand
 and brings benefits to investors, customers, employees and the society
 at large on the other.  Your Company believes in such business
 practices and places prime importance on providing reliable financial
 information, maintaining transparency and compliance of the laws in
 letter and spirit.
 
 A report on Corporate Governance is placed at Annexure-II to this
 report. Like previous years, your Company has voluntarily got the
 Secretarial Audit carried out for the year 2007-08 also as a part of
 good Corporate Governance practice and the report of the Auditors is
 placed at Annexure-III to this report.  MANAGEMENT DISCUSSION &
 ANALYSIS REPORT
 
 Management Discussion & Analysis report is placed at Annexure-IV to
 this report.
 
 COMPTROLLER AND AUDITOR GENERAL OF INDIAS COMMENTS
 
 Comments of the Comptroller and Auditor General of India on the
 Accounts for the year ended March 31, 2008, are placed at Annexure-V to
 this report.
 
 FIXED DEPOSITS
 
 During the year under review, your Company has not accepted or renewed
 any fixed deposits.
 
 AUDITORS
 
 M/s. PA & Associates were appointed as Statutory Auditors of the
 Company for the year 2007-08 by the Comptroller and Auditor General of
 India. M/s. S C Mohanty & Associates were appointed as Cost Auditors of
 the Company for the year 2007-08. M/s. Saroj Ray & Associates and M/sT.
 K. Satapathy & Co. were appointed as Secretarial Auditors of the
 Company for the year 2007-08. M/s. S C M Associates, M/s. Tej Raj & Pal
 and M/s. Das Maulik Mahendra K Agrawala & Co. were appointed as
 Internal Auditors for the year 2007-08.
 
 DIRECTORS
 
 The following changes took place in the composition of the Board of
 Directors of your Company during the year:
 
 Appointment:
 
 - Dr. A Sahay, Shri S S Sohoni, Shri K S Raju were appointed as
 Independent Directors with effect from 27.09.2007.
 
 - Shri Joy Varghese was appointed as Director (P&A) with effect from
 01.10.2007.
 
 - Shri S Vijay Kumar, Addl. Secretary, Ministry of Mines, Government of
 India was appointed as Director with effect from 23.01.2008.
 
 - Shri S B Mishra, Shri N R Mohanty, Dr. Jyoti Mukhopadhyay, Shri R K
 Sharma and Maj. Gen. (Retd.)
 
 Samay Ram were appointed as Independent Directors with effect from
 24.04.2008.
 
 Cessation:
 
 - The tenure of Shri A Ray Director (P&A) ended on 30.09.2007.
 
 - Dr. Pradeep Kumar ceased to be Director with effect from 30.11.2007.
 
 Your Directors would like to place on record their deep sense of
 appreciation for the valuable services and guidance received from Shri
 A Ray and Dr. Pradeep Kumar during their tenure on the Board of your
 Company.
 
 ACKNOWLEDGEMENT
 
 Your Directors acknowledge with gratitude the cooperation, guidance and
 support received from various Ministries of the Government of India,
 particularly the Ministry of Mines. Your Directors also express their
 sincere thanks to the Government of Orissa, Indian Railways, Mahanadi
 Coal fields and other Government agencies.
 
 Your Directors also place on record their appreciation for the
 continued co-operation and support received from various customers in
 India and abroad, vendors, bankers, auditors, solicitors, business
 associates and shareholders during the year and look forward to
 continuance of this mutually supportive relationship in future.
 
 Your Directors also wish to place on record their appreciation for hard
 work and dedicated contribution made by all Nalconians to ensure that
 the Company continues to grow to greater heights and excel as a true
 NAVRATNA.
 
 
                               For and on behalf of Board of Directors
 
 Place :Bhubaneswar                           (C R Pradhan)
 Date  :20th August, 2008         Director (P&T) and CMD I/c