Prices will remain in the uptrend by the first quarter of FY22: Sridhar Patra, CMD, NALCO

Sridhar Patra, Chairman & Managing Director, National Aluminium Company (NALCO), talks about company’s outlook for the New Year 2021, JV between NALCO & MIDHANI, CapEx, expansion plans and growth divers for the company during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpt:

Q: We have seen a momentum at the end of 2020. Do you think that this momentum will continue in 2021? What are your view and outlook for the sector in 2021?

A: Hope is always hope. Due to COVID-19, there was a slowdown in the international and Indian markets, in the first quarter of the financial year 2020-21. It was a disappointing quarter not only for the metal industry but for every sector. But, now, after the COVID, production activities have started gradually and demand for the metal has risen in international as well and Indian market. The average price stood at Rs 1,421 in April, which was the least price in the last 10 years but it improved a bit in Q1FY21, it improved even more in Q2 and the price has reached around Rs 2,000 in Q3FY21. This shows that the demand for metals has increased a lot. Due to COVID, scrap generation was also very low, so scrap is not available in the market. Demand for primary metals is very high. So by the first quarter of FY22, I hope, a very positive improvement will be seen in the ongoing prices of 2020.

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Q: Do you think that current demand will sustain in 2021? What is an update on Utkarsha Aluminum Dhatu Nigam Ltd, a JV between NALCO & MIDHANI to produce high-end aluminium alloy and what are your production targets from this JV?

A: It is a big step of NALCO and MIDHANI towards India’s Atmanirbhar move. Land acquisition and boundary wall construction have been completed by now, environment clearance is in process and several of the pre-operating activities are going on. We have plans to complete and commission it in the next three years, but we hope that it will be completed before it. And, 60,000 tonnes of high-end metal aluminium-based alloys manufacturing will increase the company’s profits significantly.

Q: Are you working on some other JVs and partnerships with some other PSUs following the government’s plan to be Aatmanirbhar? Do you have any expansion plans CapEx, if yes, please provide an outlook on it? 

A: We will expedite project completion in our 5th refinery in 2021. At the same time, we also have plans to form a JV with MCL for a 0.5 million tonnes smelter and 1,200-1,300 MW power project. So many of the plans that are in place now have to be done by looking at the market and by doing a long-time analysis. And there is a hope that the number of JVs and independent projects is there will bring huge investment in the CapEx in the company in the next three years. This will increase the 30-50% base in the profit.

Q: What are your targets for 2021 in terms of top-line, bottom-line and margins? What is going to be the growth drivers for the company in the next 2-3 years? 

A: There are ups and downs in the price of metals in the market. There is no dilemma in this, it is a market-driven rate, but alumina has always given a profit. Whether the price is low or high, in NALCO’s experience, Alumina has always given a profit. Right now, we have a focus on the 5th stream refinery, which will increase the refinery capacity by 1 million tonnes after which our capacity will increase from 2.1 million tonnes to 3.1 million tonnes. So, this 10-lakh alumina production will add a lot to the margin of the alumina.

Q: The government is making a continuous announcement in form of offer for sale to reduce its stake. So is there anything happening at your company and what will be the process for raising funds, if you will raise some funds? 

A: NALCO is a debt-free company and the self-sufficient fund is available with us, which can run for the next two-three years. But to take the advantage because interest rates are quite low at present, so, we will leverage the debt and do our work by raising 70% debt from the market, may it be a long-term debt or debenture as the interest rates are quite low. So, we will explore that opportunity as a businessman, we have equity but also, we will leverage the market financial to maximize the wealth for the stakeholders.