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17 FEBRUARY 2020 AL CIRCLE

Nalco’s financial performance to rebound in the near future with anticipated alumina price hike, analysts believe

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

After the second straight quarterly loss in the quarter ended December 31, 2019, National Aluminium Company (NALCO) is anticipated to see higher profits in the time to come, according to market analysts. Improved coal supplies and sober costs of critical inputs such as caustic soda, coal tar pitch, and calcine petroleum coke is believed to bolster the potential future hike of the company’s profits. Besides, expected strengthening in alumina prices would also contribute to the rebound, said analysts.

Nalco’s financial performance to rebound in the near future

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“The company had to battle business headwinds in the form of softening international alumina prices and acute coal crunch in the domestic market. This led to spike in costs of metal production that reflected in the company’s earnings, pushing Nalco to rare back-to-back quarterly losses”, pointed out a metals-focused analyst.

In the last financial year, Nalco had reported its best ever profit in a decade, primarily due to bullish alumina prices. The Navratna Company exited FY19 with a record profit of INR 1,732 crore as the strategy to sell its entire surplus alumina at spot markets shored up the company’s bottomline. But around the end of 2019, alumina prices had almost halved to around US$300 per tonne compared to the year last. Besides, intermittent disruptions at mines in the command area of Mahanadi Coalfields Ltd (MCL) triggered coal shortage, provoking Nalco to buy pricier power from the Odisha grid.  

Nonetheless, now a turnaround in the performance of Nalco is expected. A leading brokerage firm believes that there is a scope of alumina prices to recover and Nalco to benefit from that.

Global Aluminium Industry Outlook 2020

Nalco’s officials, however, were not immediately available for comments.

The CPSE posted loss before taxes of INR 53.22 crore for the quarter ended December 31, 2019, as against a profit before tax of INR 470.05 crore. The company’s net loss was INR 33.96 crore, steepest since it started commercial operations, primarily attributing to the sharp increase in power and fuel costs as a result of lower coal supplies from the MCL.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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