4

PROFILE OF NALCO

4.1 INTRODUCTION

NALCO was established on 7th January 1981. It has started its Aluminum exports from
its smelter plant in September 1988. The Aluminum manufactured in NALCO was
registered in London Metal Exchange (LME) in 1989. NALCO produces ingots, sows’
ingots, billets & wire rods etc. The ingots & sows are exported normally of LME grade
i.e. conforming to the specification: Al. 99.7 pct min, Fe. 0.20 pct max and Si 0.10 pct
max. But the production of other metal like billets & wire rods are exported on the basis
of future market situation & availability of products of required quality.

The export of metal in domestic & international market is set at the beginning of the
financial year by considering the production schedule of the year. However, there are
some other constraints which are also considered while setting the target i.e. the domestic
& export market scenario prevailing them, production plan, the commercial
consideration, salability and maintenance of NALCO’s presence in these markets.
Depending on the above export target & revision thereof from time to time order
booking/ contract for forward/ current month are done. The export & movement of metal
by rail are decided in the beginning of the month in a meeting held with smelter plant.
Generally, an export of metals is done from its three ports located in Kolkata, Paradip
and Visakhapatnam. All exports are occurred on CIF or C&F basis. The exports are
made against contract entered into by NALCO with overseas customers and against
firm’s financial arrangements mostly in the form of irrevocable letter of credit. The
contracts are entered into only with its registered customer through the process of limited
tender floated by NALCO.

4.2 LANDMARK EVENTS

 1975- Discovery of bauxite in the East Coast

  1979- Preparation of NALCO's Feasibility Report-July
 1980- Investment decision by the Government-Jan
 1981-Indo-French Collaboration Agreement-Jan. Formation of the company-Jan.
Foundation Stone laid by Late Smt. Indira Gandhi –March
 1982- Signing of major Euro-Dollar Loan agreement -Feb. Civil Work Starts
 1985- Commissioning dates Port Facilities-Sept. Bauxite Mines-Nov.
 1986- Alumina Refinery-Sept. Captive Power Plant- Sept
 1988- Commencement of Alumina export-Jan. Commencement of Aluminum
export-Sept. First Mines Safety Award First CAPEXIL Export award
 1989- London Metal Exchange Recognition -May Dedicated to Nation by Late
Shri Rajiv Gandhi-June
 1992- Star Trading House Status-Jan
 1994- Indira Gandhi Rajbhasa Award/Indira Priyadarsini Vrikshamitra Award.
 1996-97- FICCI Award for Pollution Control and Environment. Excellent Public
Sector Enterprise Award.
 1997- Environment Protection Award by IIEE-Dec
 1997-98- Gem Granite Environment & Sri Sitaram Rungta Memorial Social
Awareness Award.
 1998- Best Occupational Health Service Award by Govt. of Orissa.
 1998-99- First EEPC Export Award. Best Exporter Award of the year.
 1999-2000- Best Exporter Award of the year.
 2000-01- Best Exporter Award of the year.
 2000- Indira Gandhi Paryavaran Puraskar Award.
 2000-01- FIMI Environment Award.
 2001- Rajbhasa Shield by Ministry of Mines.
 2002- State Pollution Control Excellence Award.
 2002-03- FIEO Niryat Shree Award.
 2004- Capexil’s Highest Export Award.

4.3 LOCATIONS OF NALCO

NALCO projects mostly located in backward districts of Orissa were expeditiously

completed on schedule on the very difficult logistics of project management. The Mines
and Alumina Refinery Complex has located at Damanjodi in Koraput District. This is a
picture sque valley of this beautiful district at the foot of Panchpatmali Hills. A 16 km
long uphill road connects the plateau of Panchapatmali, where the bauxite Mines of
NALCO is located. Damanjodi is 12 Km. from Semiliguda, a small town located on the
NH-43 that connects Vizianagarm of Andhra Pradesh with Jagdalpur of Chatisgarh. The
Vizianagaram is a distance of 135 Km. There is of course a passenger rail service from
Koraput to Visakhapatnam through the most enchanting hilly terrains of Aruku Valley
and Anantagiri. Damanjodi is also connected by Rail Transport from Bhubaneswar,
Rayagada, Visakhapatnam, Sambalpur & Kolkata. It is also connected by bus service
from Berhampur, Cuttack, Bhubaneswar, Angul & Samabalpur. Its Smelter Plant and
CPP are located at Angul, while the corporate head quarter is located at Bhubaneswar,
the capital city of Orissa.

4.4 PLANT LOCATION SITES

4.5 PROCESS OF ALUMINUM PRODUCTION

Smelters in Asia
Bahrain------------------------ Alba
Azerbaidjan-------------------- Sumgait Aluminum
India------------------------ NALCO, Balco, Hindalco, Malco, Indalco
Indonesia---------------------- Inalum
Iran----------------------------- Iralco
Japan---------------------------- Kambara.
U.A.E----------------------------- Dubai

Aluminum Smelter

The 2, 30,000 tpa capacity Aluminum Smelter

is located at Angul in Orissa. Based on energy
efficient state-of-the-art technology of smelting
and pollution control, the Smelter Plant is in
operation since early 1987. Presently, the
capacity is being expanded to 3, 45,000 tpa.
4.6 SMELTER PLANT

The year ended with all the 800

pots in operation. Smelter plant has
exceeded the rated capacity with
highest ever cast metal production
at 2, 98,207 MT. The Metal purity
and pot productivity during the
year has also increased to 99.74 %
and 1.375 MT/pt/day respectively
from 99.77 % and 1.367
MT/pot/day achieved last year
Zero Discharge of industrial effluents was achieved in the year.
Captive Power Plant
Close to the Aluminum Smelter at Angul, a Captive Power Plant of 720 MW capacity,
comprising 6 x 120 MW clusters, has been established for firm supply of power to the
Smelter. Presently, the capacity is being expanded to 960 MW.

4.7 CAPTIVE POWER PLANT (CPP)

CPP Generated 6671MU of Net power being the highest since inception. Productivity of
plant has improved with plant load factor at 76.47% as compared to 75.15% in the
previous year. CPP also achieved the ‘Zero Discharge’ status with commissioning of ash
pond over flow recycling system.

POWER IN MILLION UNIT'S

7000
6000
5000
4000 GENERATION
3000 SALES
2000
1000
0
2009-10 2008-09 2007-08 2006-07 2005-06

The salient features:

 Micro-processor-based burner management system for optimum thermal
efficiency
 Computer controlled data acquisition system for on-line monitoring
  Automatic turbine run-up system
 Specially designed barrel type high pressure turbine
 Electrostatic precipitators with advanced intelligent controllers
 Wet disposal of ash
The water for the Plant is drawn from River Brahmani through a 7 km long double
circuit pipeline. The coal demand is met from a mine of 3.5 million tpa capacity opened
up for NALCO at Bharatpur in Talcher by Mahanadi Coalfields Limited. The Power
Plant is inter-connected with the State Grid.

Bauxite Mines

On Panchpatmali hills of Koraput district in Orissa, a fully mechanized opencast mine of

4.8 million tpa capacity is in operation since November, 1985, serving feedstock to
Alumina Refinery at Damanjodi located on the foothills. Presently, the capacity is being
expanded to 6.3 million tpa.

4.8 MINES

Panchpatmali Bauxite mines achieved the rated capacity of 4.8million tones of Bauxite
production for the first time since commissioning of the expansion project. Annual
bauxite transportation at 48, 54,253 MT & excavation of 47,78,816 MT have been the
highest since inception.

Bauxite Production (in ‘000 MTs)

BUXITE PRODUCTION IN('000MTs)

4800
4750
4700
4650
4600
4550
4500
2009-10 2008-09 2007-08 2006-07 2005-06

The salient features

 Area of deposit - 16 sq. km.

 Resource - 310 million tones
 Ore quality - Alumina 45%, Silica 2%
  Mineralogy - Over 90% gibbsite
 Over burden - 3 meters (average)
 Ore thickness - 14 meters (average)
 Transport - 14.6 km long single flight multicurve cable belt conveyor of 1800
tph

Alumina Refinery 

The 15, 75,000 tpa Alumina Refinery, having three parallel

streams of equal capacity, is located in the picturesque
valley of Damanjodi in Koraput district. In operation since
September, 1986, the Refinery is designed to:

 Provide Alumina to the Company's Smelter at

Angul
 Export the balance Alumina to overseas markets through Visakhapatnam Port
 Presently, the capacity is being expanded to 21, 00,000 tpa.
 Production of Alumina Hydrate at 15, 90,100MT and Calcined Alumina of 15,
50,100 MT have been the highest since inception. Similarly, the Power
Generation of 386.16 at steam generation plant of Refinery has been the
highest ever since inception.

ALUMINA IN('000MTs)

2000

1500
porduction
1000
export
500

0
2009-10 2008-09 2007-08 2006-07 2005-06

Salient Features

 Atmospheric pressure digestion process

 Pre-desilication and inter-stage cooling for higher productivity
 Energy efficient fluidized bed calciners
 Advanced red mud disposal system
 Co-generation of 3x18.5 MW power by use of back pressure turbine in
steam generation plant

Port Facilities
On the Northern Arm of the Inner Harbor of Visakhapatnam Port on the Bay of
Bengal, NALCO has established mechanized storage and ship handling
facilities for exporting Alumina in bulk and importing Caustic Soda. The
company has registered a net profit of Rs.2381 crores in 2007-08 against
Rs.1562 Crores in 2006-07 registering an increase of 52.43 % .The sales
turnover has also been showing an increasing trend. In 2007-08 it has increased
to 24.25 % over the last year’s sales turnover of Rs.5423 crores.

The salient features

 Maximum ship size - 35000 DWT

 Alumina reception - 48 x 53 ton pay-load
wagons
 Alumina storage - 3 x 25000-ton RCC
in MT 2003-04 2004-05 2005-06 2006-07 2007-08

Alumina
4,79,620 4,95,723 6,70,120 10,37,287 9,34,874
Export
Aluminum
55,729 73,711 57,370 52,730 59,046
Export
+45,002*+ +28,486* +20,143*
  +39,456* +45,157*
3910 +26,086** +50,529**
Caustic Soda
1,23,108 1,22,838 1,80,491 2,28,716 1,86,394
Import

 Ship loading rate - 2200 tph

 These facilities are being upgraded to handle higher volumes of exports,
following expansion of production capacities
Port Facilities, Visakhapatnam

Rolled Products Unit

NALCO has set up a 50,000 MT per annum Rolled Products Unit, integrated with the
Smelter Plant at Angul, for production of Aluminum cold rolled sheets and coils from
continuous caster route, based on the advanced technology of FATA Hunter, Italy.

Brownfield Expansions

Creditably, except for the part funding of the capital cost of the original project to the
tune of Rs.1288.62 crores by way of equity, NALCO has not depended on the
Government budgetary support at any point of time – not even for the Rs.3600-crore 1st
phase expansion project. Continuing with its self-propelled growth, now the 2nd phase
expansion is under implementation at an investment of Rs.4092 crores, which is
scheduled to be completed by 2009 end. NALCO is presently undergoing its 2nd phase
expansion with an investment of more than Rs.5000 crores, which is scheduled to be
completed by this year end. At the same time, plans are afoot to set up Smelter and
Power Plants in Indonesia and South Africa by the company.

Original After 1st Phase After 2nd Phase

Unit Capacities Expansion Expansion
Bauxite Mines 24,00,000 MT 48,00,000 MT 63,00,000 MT
Alumina Refinery 8,00,000 MT 15,75,000 MT 21,00,000 MT
Aluminum Smelter 2,30,000 MT 3,45,000 MT 4,60,000 MT
Power Plant 600 MW 960 MW 1200 MW

Now, plans are afoot for 3rd phase expansion, which is likely to entail expenditure to the
tune of Rs.6000 crores. Under this expansion, the bauxite mining capacity shall be
enhanced to around 90 lakh tones, alumina refining to 30 lakh tones, aluminum smelting
to 6.3 lakh tons and power generation to 1700 MW per annum. 

4.9 SEGMENTS

Different segments of the company went into production in a phased manner starting
from November 1985. NALCO is a multi-unit, Multilocational Company having its plant
in four different places. The integrated project has five segments.

SEGMENT CAPACITY LOCATION

 At: Panchapatmale
1. Bauxite Mine 2,40,000 Tones
Dist.: Koraput
At: Damonjodi
2. Alumina Refinery 8,00,000 Tones
Dist. Koraput
At: Angul
3. Aluminium Smelter 2,18,000Tones
Dist.: Angul
At: Angul
4. Captive Power Plant 720 MW
Dist.: Angul
3,75,000 Tones At: Visakhapatnam
5. Port Facilities
1,46,000 Tones Andhra Pradesh

4.10 PRODUCT PROFILE

Aluminium metal
 Ingots
 Sows
 Billets
 Wire rods
 Alloy wire rods
 Cast strips
Alumina & Hydrate
 Calcined Alumina
 Alumina Hydrate
Zeolite-A
Special Products
 Specialty Hydrate/Alumina
 (Alumina Chemicals)
Rolled Product
 Aluminium Rolled Products

4.11 NALCO’s PRESENT SITUATION

 National Aluminium Company Limited (NALCO), during four years, has crossed
all the previous records in areas of sales turn over, gross margin, export earning,
profit before tax and after tax. But in the current year NALCO faced very crucial
situation.
 Highest export turnover of Alumina in 2006-07 at Rs. 1463.88 crores has been
recorded, surpassing the previous highest of Rs 1386.09 crores in 2005-06.
 Highest ever domestic sale of metal of 2, 61,636 MT in 2006-07 was registered,
surpassing the previous best of 2, 58,094 MT in 2005-06.
 NALCO has produced 46, 23,278 tons of bauxite, 14, 75,200 tons of Alumina and
3,58,734 tons of aluminium during 2006-07.
 NALCO’s gross sales turnover was all time high at Rs. 6514.51 crores in 2006-07
against Rs. 5287.36 crores in 2005-06.
 NALCO has reported a 52.39% jump in net profit to Rs. 2380.70 crores during
2006-07 fiscal, as against Rs. 1562.20 crores achieved in the previous year. The
company also registered the highest-ever turnover of Rs. 6516.78 crores, recording
an increase of 22.40% over the previous year’s figure of Rs. 5324.16 crores.
 NALCO achieves Rs. 446.66 crores net profits in Q1 of 2007-08 with a sales
turnover of Rs. 1287.12.
 NALCO achieves Rs. 439.73 crores net profit in 2 nd quarter of 2007-08 with a
sales turnover of Rs. 1432.12 crores.
 NALCO has bagged the prestigious Industrial Trade Quality Achievement Award,
for the highest-ever production and export performance during 2006. The award
has been instituted by the Council for Industrial & Trade Development (CITD).
 For excellence in export, NALCO has bagged the prestigious Niryat Shree award,
instituted by the Federation of Indian Export Organization (FIEO).
 NALCO bagged the Top CAPAXIL Export Award for 2006-07 and for the 19 th
Year in succession.
 NALCO has signed a Memorandum of Understanding with the Ministry of Mines,
Govt. of India, for the financial year 2007-08. NALCO has projected more than
100% capacity utilization of its aluminium smelter and alumina refinery. The
company has also projected higher financial targets and financial commitments to
ensure smooth completion of its 2nd phase expansion project in time.
 NALCO has paid Rs. 84 crores as Govt.’s share in 2 nd interim dividend of 15% on
a total paid up capital of Rs. 644.31 crore for the 2006-07 fiscal. Earlier, the
Company had paid an interim dividend of 35% in the month of February.
Together, the pay-out works out to Rs. 322.15 crore as 50% interim dividend, out
of which Govt.’s share is Rs. 281 crores. During 2004-05 and 2005-06 the
company had paid 40% and 50% dividend, respectively, on the same paid-up
capital.
 National Aluminium Company Limited (NALCO) has sponsored 82 students for
industrial training in the state-run ITIs for the academic year 2007-08. NALCO
 would contribute Rs. 35 Lakh for fully-funded training of these students who come
from land displaced families at Angul.
 NALCO has sponsored 461 wards of such displaced families, out of which 425
have been provided employment and absorbed in Company’s rolls.
 NALCO has planted 3, 99,300 nos. of trees in all its units, compared to 2, 74,246
nos. in 2005-06.
 NALCO has been playing a catalytic role in improving the quality of life of
people. It has been adjudged the best Mother Plant in Orissa for the growth of
ancillary and downstream industry.

4.12 SOME OTHER IMPORTANT AWARDS AND RECOGNITION

Receipt of various awards during the year as detailed bellow stands ample testimony for
the excellent performance of your company in various fields:

 Export award from CAPEXIL for the year 2005-06 for the 19th year in
succession.
 ‘Niryat Shree’ Award for 2003-04 and 2004-05 from Federation of Indian Export
Organitions (FIEO).
 Top Exporter Gold Trophy of EEPC, Eastern Region under large Enterprise
category for the year 2004-05.
 Star performer Award of EEPC, southern region.
 Dun & Bradstreet – American Express Corporate Award as the top Indian
company in the non-ferrous metals sector.
 Best Mother Plant Award at EXPO-ODISHA 2006.
 Cll Eastern Region Award for “Best practices in safety, Occupational Health &
Environment” for Alumina Refinery

4.13 THE PROGRESS OF NALCO IN THE ECONOMY OF ORISSA

As the time is very short, it is difficult to represent all the supports given by NALCO that
lead to better economic betterment of Orissa. So, I have taken utmost attempts to
highlights the achievements of NALCO in the above stated topic within the stipulated
time.

In 1975 the Indian Govt. discovers over 1000 million tons of bauxite reserve in the East
Coast, which is pushing the country in the 5 th rank in the world bauxite map, with a total
estimated reserve of 2900 million tones. As the major step towards exploiting these vast
bauxite deposits, the Govt. of India in Jan. 7, 1981 established the National Aluminum
Company Limited (NALCO) with its registered office at Bhubaneswar. The foundation
store of the giant project was laid by the Prime Minister late Smt. Indira Gandhi on 29 th
March 1981 at Damanjodi in the district of Koraput of Orissa.

Since that day NALCO has been playing a vital role to improve the economic condition
of Orissa. At present investment in Orissa touches about Rs 4,05,000 Cr. Taking
advantage of its rich mineral deposits, Orissa has attracted investment proposals of an
astronomical Rs. 4,05,000 Cr. So far and in all meetings, expression is “Look at
NALCO, Its Stupendous Success. It’s Commitment to Community Around”

Since its inception in 1981 as a public sector company of the significant contribution to
the economies of the center as well as the state through export earning, payment of
dividend, taxes and duties, employment generation and regional development. The
community developmental activities undertaken by NALCO include especially at
Damanjodi and Angul periphery regions.

In its journey of 26 years towards corporate excellence, NALCO has given top priority to
social sector development. The company spends 1% of its net profit every year on
periphery development in its areas of operation. It provides additional funds as and when
required for special projects contributes to Chief Minister Relief Fund and Prime
Minister National Relief Fund at time of calamity. Besides these, NALCO spends more
than Rs. 100 lakhs every year sponsoring seminars, cultural programmes and sports
events all over the state. The company has appointed sports persons and organized state
and zonal level tournaments too. It is also committed to develop “The Ananda Bazar of
Lord Jagannath Temple” at Puri.

NALCO is perceived as a symbol of “Oriya Pride” because it is considered as one of the

few industrial units that carry out its entire manufacturing process within the state.
NALCO has come forward to represent a better quality of life for communities residing
in the vicinity of its plants and facilities. Creation of infrastructure in and around the
village for communication, education, health care and drinking water get priority in the
periphery development plans of the company. Community participation in innovative
farming, pisciculture, social forestry and sanitation programmes apart, encouragement to
sports, art culture and literature are all a part of NALCO’s deep involvement with the life
of the community. Successful operation of the company has led to employment and
income generation for the local people in many significant ways. Near about 7,000
people are working as employees NALCO. Most of them are from our state Orissa.
NALCO has taken as a model for other industries in the backward state like Orissa.
Orissa has received considerable benefits owing the presence of NALCO Apart from
NALCO’s PDP, the company also supplies cheap power supply to the Orissa grid and
provides direct and indirect employment opportunities to thousands of workers.

In pursuit of technological excellence NALCO has not lost the sight of its social
responsibilities. For NALCO, Success is not all about production and profit, but also
carrying for the people around it, through education, health care, water supply,
infrastructure for communication, social forestry culture and sports.

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