Strong performance in Q2 sustainable for H2FY14: NALCO

National Aluminium Company (NALCO) reported strong numbers on the back of higher coal linkage in Q2 CMD Ansuman Das told CNBC-TV18. The company’s net profit for the July-September quarter grew 37.3 times year-on-year to Rs 179 crore on operational performance.

According to Das, the strong performance in Q2 is sustainable in the second half of FY14 as the company holds a good stock of coal and the supply of coal is likely to improve further in Q3. Going ahead, the falling input costs will aid margins of the company, he adds. Below is the verbatim transcript of Ansuman Das’ interview on CNBC-TV18 Q: Can you take us through your operational performance; earnings before interest, taxes, depreciation and amortisation (EBITDA) margins at 14 percent because of a dip that you have seen in power and fuel cost. Is this 14 percent level sustainable through the second half of the fiscal as well?
A: I feel this level is sustainable because the way we operated in Q1 and Q2, we have been able to maintain the cost of production. If we can make a proper coal management then we should be able to maintain this margin. Q: Was the supply of coal more regular this time because your power and fuel costs have come down?
A: Yes, the supply of coal was regular and we have been able to receive close to about 100 percent or maybe 99 percent. It was regular and we have been able to reduce the use of import washed coal level below 10 percent. Q: What will you do in the current quarter? You have already seen about a month-and-a-half of this quarter, will you be able to maintain this rate of margins and sales growth?
A: We will be able to do that because we have been holding good stock of coal and supply of coal will further improve in Q3 so we will be able to maintain this. Also, the input costs of other raw materials have been able to maintain and there have been a slight marginal reduction in input cost of other raw materials as well. Therefore, if this will be supportive then we should be able to improve our margins. Q: How will you alumina sales pan out in the second half of the fiscal and will there be any further expansion of alumina refinery?
A: We have already started commissioning of the up-gradation of the facility and so, there will be an improvement in alumina production, in fact the calcined alumina production that we did in Q2 was close to Q1 but as compared to the previous year Q2 the production was much higher and this quarter we produced about close to 5 lakh tonne of calcined alumina and we will be able to maintain this.