National Aluminium Company Ltd (Nalco) is taking steps to secure a future beyond aluminium. In an interview to ET, the company’s chairman, TK Chand, said a special business vertical has been created to look for lithium reserves that the company can acquire. NalcoNSE 1.28 % is also venturing into production of high-end alloys for space vehicles and electric cars and will take up merchant mining and mineral trading as part of a plan to insulate the company from the vagaries of the aluminium cycle, Chand said. Excerpts:
Nalco is venturing into new territories. Can you share some of your plans and initiatives?
Nalco is building on its expertise in bauxite mining and aluminium production to create a company of the future. For this, we have set up a two new business verticals to focus on lithium-ion and merchant mining. The lithium vertical will spearhead our efforts to acquire lithium and other strategic mineral assets globally. This includes our three-way joint venture Khanij Videsh India (Khavil) with Hindustan Copper and MECL. Apart from scouting for assets in the ‘lithium triangle’ or ‘ABC’ (Argentina, Bolivia and Chile), we will also engage in mineral trading. While India does not have proven reserves of lithium, we are also, for the first time, exploring prospects of sourcing lithium in Gujarat and Rajasthan by investing Rs 15-20 crore in a pilot project.
Nalco is among the ten companies shortlisted by Isro to make lithium-ion batteries for space vehicles. We are also looking at partnerships with Japanese and Korean companies for making batteries for electric cars in India.
While Nalco has so far been a captive miner, producing bauxite for its own needs, we have now decided to enter merchant mining. We are in the process of getting a bauxite reserve in Saranda (Jharkhand) from MECL and we will also participate in e-auction for bauxite.
Besides strategic minerals, are you looking at producing alloys?
We have initiated efforts to move into high-end alloys through a Rs 4,500-crore joint venture with Mishra Dhatu Nigam (Midhani), a defence ministry undertaking. The proposal has been cleared by the board and by the ministry. We are in the process of finalising the joint venture agreement, following which we will incorporate the company. This will produce high-end alloys used in space automobiles, railways and electric vehicles. Aluminium is a metal of the future. Three factors work in its favour –speed due to lightness, savings in terms of fuel cost, and sustainability by lowering carbon emissions.
What is the main imperative behind your foray into new areas?
We are trying to insulate the company from the vagaries of the aluminium cycle.
What are Nalco’s growth plans in its traditional business of aluminium?
We have embarked on a Rs 5,500-crore project to expand our aluminium refinery at Damanjodi. The expansion will be completed by FY22. Post expansion, the refinery capacity will go up to 3.2 million tonnes per annum (mtpa) from 2.2 mtpa now. We hope to start Utkal D this year and its capacity will be ramped up over the next two years.
In terms of numbers and profitability, what is Nalco’s target over the next few years?
Nalco’s profitability has been on the rise in the last few years. We set a target that we internally codenamed “3-4-5”. It stood for a three-fold rise in profitability to a four-figure amount with a five-digit turnover. From a profit of Rs 731 crore in FY16 on a turnover of Rs 6,703 crore, we touched a profit of Rs 1,732 crore last fiscal (FY19) on a turnover of Rs 11,386 crore. We have set our sights on a profit figure of Rs 2,000 crore in FY20. Post commissioning and ramp up of Utkal D coal block and the refinery expansion, we hope to add about Rs 900 crore to the bottomline, which will help sustain a profitability of well over Rs 2,000 crore in FY22.