State-run aluminium maker Nalco reported a 170.5 percent rise in net profit to Rs 354.47 crore for the quarter ended December, on the back of higher income from operations.
State-run aluminium maker NALCO reported a 170.5 percent rise in net profit to Rs 354.47 crore for the quarter ended December, on the back of higher income from operations.
Discussing the earnings, Ansuman Das, CMD, NALCO, said the fall in the raw material prices has helped the company positively in Q3. He expects the production volume to improve in Q4.
For NALCO, metals realisations in Q3 were up close to 23 percent. Das expects aluminium utilisations to increase in Q4, depending upon the coal availability at a good rate.
Below is the transcript of Ansuman Das’s interview with Nigel D’Souza on CNBC-TV18.
Q: Good set of numbers, topline went higher by close to around 16 percent, two details I want, what are the realisations on aluminium as well as alumina and also the volumes picture for the past quarter?
A: As far as the volumes are concerned, we will be definitely doing better in Q4 than what we achieved in Q3.
Coming to the reasons for higher profitability the first thing was the increase in the sales realisation. Alumina and aluminium, both the realisations vis-à-vis the quarter ending September and quarter ending December, the December quarter we did a little better.
In rupee terms it was even better because we got a little bit of push from the exchange rates also. At the exchange rate of 60.7 averaging in the Q2, the average exchange rate in Q3 was 62.15. LME more or less remained at the same level, there is a marginal fall but it almost remained at the same level. However, on the whole our realisation was much better. In metal, it was close to 20 percent higher realisation. So, that was something which helped us.
Q: Talking about the physical premiums that you were getting, they were around USD 200-250 per tonne, have they moved towards that USD 400 per tonne?
A: Physical market premiums in the export of metal we are getting close to about USD 385 per tonne earlier. However, about 10 days back, we did a tender; the premiums have gone down sharply by about USD 100. We will watch this USD 100 premiums’ whether we get a little bit of compensation on the LME, if there is a increase in subsequent period or there will be some corrections in the premiums also. However, premiums have fallen in the metal market.
Q: That is a sharp fall, that is a 30 percent downtick from the USD 385 per tonne that you were getting earlier?
A: There is a sharp fall in premiums at the metal.
Q: Talking about your last quarter what was the capacity utilisations for your aluminium segment, you have always been maintaining, you are looking to maintain it around that 70-75 percent. Has aluminimum capacity utilisation gone higher or have you maintained it at those levels?
A: We have maintained at that same level in Q3. Q4 we are thinking of increasing the utilisation a little. We will be starting about 12 ports very shortly and we are also looking forward to looking at the reduced price of the imported coal if we can make some marginal coal imports and also run few more ports. We have not decided as of now, we are watching the LME and premiums and we will take a call on it maybe in next 10 days time or so.
Q: So you can push up your utilisation on aluminimum by around 80 percent but that will hit your margins going ahead?
A: We will not do to it unless we get coal at a very competitive price.
Q: The alumina segment, entire alumina sales have been exported, 90-95 percent?
Q: With regards to your margins, pleasant surprise over there – low energy cost, your power and fuel cost have come down by nearly around 14 percent so I need to know what exactly is the linkage that you are receiving, is it that 85-90 percent, you are buying only around 10 percent from the e-auction market and also give us one more details what is the total linkage you receive in one financial year?
A: The total coal linkage in a financial year it is about 4.7 million tonne. We have requested the government to increase it because now that the coal block is not there, till such time we get the coal block we have another coal block to ourselves; we have requested. There was a tapering linkage which has become zero so from 4.7 billion tonne we are expecting additional linkage from the government.
The usage has been practically on linkage coal, there has been no import of coal. However, the specific consumption of the coal has gone down in Captive Power Plants (CPPs). There has been some coal management corrections made and the specific consumption has gone down.
I will also highlight one more thing that specific consumption has also gone down in the alumina segment as far as the caustic soda is concerned which is a major cost driver. So, these two things added to that there has been a decrease in the price of caustic soda, fuel oil, coke and pitch – four of our major raw materials; that also helped us in bringing down the cost of production.
Q: Your EBITDA margins have come in at around 28 percent, now that is the highest we have seen in the last three years. Do you believe that is sustainable or do you think you have seen the best?
A: It is sustainable and Q4 I expect it to be even better.
Q: We need to talk about the coal block that you were talking about. Now you will have to go ahead, you will have to participate in this entire bidding process and you will have to compete with some of those companies as well. Do you think that if in the case that you don’t get that higher linkage from around 4.7 million tonne then what are the coal blocks that you are looking at?
A: The allotment process is on, we have already put our claim on the Utkal-D and Utkal-E and the allotment process is already on. It is only for us to see now that whether the government honours the commitment that it has made in the ordinance saying that the CPPs will also be covered under the power sector. The ordinance very clearly says power includes production by the captive power producers, now let us see whatever is mentioned in the ordinance whether that gets carried forward when it comes to the allotment process or not.
Q: Utkal-D and Utkal-E have been reserved for the power sector or you can use all that coal for your aluminimum smelter and the likes?
A: These are all first lot of allotment route for the government companies and we have bid for Utkal- D and E; that is for power.