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May 22, 2012, 04.12 PM IST
State-owned National Aluminium Company has a "comfortable" coal inventory at an average of 18-19 days and should be able to manage the upcoming monsoon season, BL Bagra, CMD and Director (Finance) told CNBC-TV18.
Monsoon is typically a slack period for metal companies in general. The PSU had faced coal shortage during September-October last year, but the supply has been "fairly satisfactory" since last November, Bagra said.
Nalco's March quarter net sales rose 9% to Rs 6,500.27 crore, but net profit grew less than 8% to Rs 282.10 crore as high fuel costs and lower realisations on aluminium sales crimped margins. Gross aluminum sales were up only about 3% to Rs 4,968.05 crore
According to Bagra, aluminium prices will remain between USD 2,100 and USD 2,300 per tonne in the current fiscal year. "With the premium of USD 150, we feel it will not give us any kind of impact in the current year’s results," he says.
Meanwhile, there are talks that the company may help out the cash-starved government with part of its Rs 5,500 crore cash surplus. However, Bagra says there is no such plan either to buyback shares or pay a hefty dividend, currently.
"We have lined up some growth projects, which will need a lot of cash in current year, as well as next year," he told CNBC-TV18.
Nalco plans to invest Rs 57,903 crore by 2020 on expansion, which includes two large aluminium smelters in India and abroad.
Below is the edited transcript of the interview on CNBC-TV18. Also watch the accompanying video.
Q: Let us start by talking about your coal situation because you did face a lot of shortages in FY12. How is the situation looking for FY13?
A: The situation on the coal front has been quite satisfactory since November last year. There were lot of problems in September and early October, but from November we have been having very steady supplies from Mahanadi Coal Fields. The result of that in any case is reflected in the Q4 results declared yesterday. We have been able to control our operating cost as compared to the earlier quarters.
Right now, we have stock that could last 18-19 days of consumption. Going by our history, the average stock was never more than 7-8 days. Hence, it is quite comfortable. But, that is only up to the good season, that is, we call Q3 and Q4 as a good season from the coal point of view.
Now we are entering monsoons next month and difficulties in coal transportation starts then. But, since we are carrying good stock, we hope that there should not be any problem on this account, this year.
Q: There are some concerns on LME Aluminum prices themselves. What is it that you would expect to see from these prices even as a range this year and how might that impact your margin performance for the calendar year?
A: LME prices have been a cause of concern. There is nothing we can do about them but, since it affects our top line and bottom-line very considerably, we have been following them. The LME prices have been travelling southwards for last couple of months and they even broke the psychological level of USD 2000 after a long time.
The premiums over the last two months have increased considerably, by almost 100%. In the last couple of months, we are enjoying more than USD 150 per tonne premiums on our export tenders. Whatever is the loss on the LME metal price front, has been made good to some extent by higher premiums.
But, fact remains that prices are not recovering in a manner which we would like to. Despite the fact that there is a cost increase on all accounts, particularly all the prices of input materials have registered a hefty increase over the last 1 year. There is no cost push factor seen in the prices.
We feel, in the current year the prices would be within the range of USD 2100 and 2300. And with premium of more than USD 150, we feel that the price front will either give us negative or any positive impact in the current year results.
May 22 2013, 13:11
- in MARKET OUTLOOK
May 22 2013, 10:44
- in Economy