National Aluminium Company （NALCO） has announced its second quarter results. The company’s Q2 net profit was up 41% at Rs 224 crore versus Rs 159 crore, year-on-year （YoY）.
Its net sales were up 27.29% at Rs 1,455 crore versus Rs 1,143 crore, YoY.
In an interview to CNBC-TV18, BL Bagra, Director- Finance, Nalco gave his perspective on the quarter gone by and the challenges ahead.
Here is the verbatim transcript of his comments. Also watch the accompanying video.
Q: Just start off by giving us numbers this time around and what exactly have you done in terms of metal sales volumes?
A: As far as metals sale is concerned and in terms of volumes, the metal sales remain almost the same level as that was in the same quarter last year. Our sale of alumina in this quarter has increased by 40%. Alumina sale this quarter was 214,000 tonne as compared to 153,000 tonne same quarter last year. So this 40% increase in the sale of alumina export has contributed to the increase in the top line as well as the realisation both from the metal and aluminum plate has increased quite substantially. The price increase in metal was as much as 14% and in case of alumina it was 31% high this quarter as compared to last. So it is a combined effect of better prices as well as the higher volumes of alumina which has contributed to the top line.
Q: Where does your operating profit margins stand currently, vis-à-vis last quarter and versus last year?
A: As far as operating cost is concerned this year operating cost has gone up by 9% and largely it is due to use of more imported coal in ratio as compared to last year but the margins have improved quite substantially. The margins this year are as much as 35% compared to 21% last year. So operating cost is under control and realization has gone up this year.
Q: On a sequential basis, how much has the realizations gone up both in alumina and in metals?
A: In case of metals, sequential basis of Q1 of this year and Q2 of this year remains almost at the same level. Compared to the previous year whether it is quarter or whether cumulative for the half year both have increased ranging between metal 15% and Alumina 30%.
Q: This 32% operating profit margin that you spoke about it’s a really big jump compared to what you did last quarter last year versus about 12% purely because of what you spoke that is the higher Alumina prices. In FY11 for the entire fiscal you think you could close at these margins or do you think you could substantially move up higher from here?
A: We hope that the margins will continue to remain the same as in Q1 and Q2 this year we hope to continue with the same margin in the remaining two quarters of the current fiscal.
Q: What about your refinery expansion benefits that you are expecting to see? It is expected that in the second half of the fiscal that will come in so once that they start to trickle in how will that affect your bottom line and your profitability?
A: In the remaining two quarters of this fiscal we do not expect any volume increase coming out of the expansion project because as far as smelter was concerned, smelter was commissioned last year itself so we are realising the full benefit of the smelter capacity increase but 1100 aluminum plate refinery is lagging behind. We don’t expect really any substantial additional volumes coming out to the expanded capacity this fiscal because it’s commission is expected to take place in the last two months of the current fiscal and initial commissioning expense, time taken is always a bit high so there will be some marginal increase in the volumes in alumina this fiscal but not in a very substantial number.
Q: What about metals? Do you think you could do about 50000 tonne in the entire fiscal in FY11 or you think you could surpass that?
A: There will be some increase in the metal but not to the extent of 50000 tonne as you mentioned. There will be 10000 to 15000 tonne additional this year as compared to last year.