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INTRODUCTION TO THE ALUMINIUM INDUSTRY 

Aluminium - The Wonder Metal 

Aluminium is a unique metal with remarkable features and versatile applications in every range of life. Aluminium can be formed into different shapes by any of the usual processes in industry. It is a good reflector of thermal, optical and electromagnetic radiation. Even minor addition of iron has no significant magnetic field of aluminium. Aluminium weighs only 0.34 times as much as iron. Pure unalloyed aluminium alloys may surpass the tensile strength of steel. Aluminium surface can be reinforced to protect from weather and chemical corrosion. Aluminium is equivalent in conductance while being 50% lighter. Aluminium permits rapid heat dissipation. The metal and its sources are non-toxic and it is, therefore, an important packaging material for food. Many possibilities are available for treating and texturing aluminium surface.  

In the last several years, aluminium has accelerated its applications in a multiple of sectors by replacing other metals. The demand of aluminium is based on its enviable combination properties. While rate of growth in other countries is low due to the fact that they have reached towards the peak, the same in Asia and in particular India is increasing. Presently the per capita consumption of aluminium in India is only 0.5 kg compared to 32 kg in Japan, 27 kg in USA and 3.6 kg in Brazil. But with the population growth of 2.5% and per capita income growth as 8%, in a highly optimistic scenario, the per capita consumption figure of aluminium will grow by 10% in the coming days. Aluminium industry is in the growth period of life cycle and till another five decades it is predicted that the demand in aluminium will remain buoyant. 

History Of The Aluminium Industry 

Aluminium is the third most abundant metal and constitutes 7.3% by mass. In nature, however, it only exists in very stable combinations with other materials and it was not until 1808 that its existence was first established. It took many years of painstaking research to unlock the metal from its ore and many more to produce a viable, commercial production process.

In 1808, Sir Humphry Davy (Britain) established the existence of aluminium and named it.

In 1821, P. Berthier (France) discovers a hard, reddish, clay-like material containing 52 per cent aluminium oxide near the village of Les Baux in southern France. He called it bauxite, the most common ore of aluminium.

In 1825, Hans Christian Oersted (Denmark) produces minute quantities of aluminium metal by using diluted potassium amalgam to react with anhydrous aluminium chloride, and distilling the resulting mercury away to leave a residue of slightly impure aluminium.

In 1827, Friedrich Wohler (Germany) describes a process for  producing aluminium as a powder by reacting potassium with anhydrous  aluminium chloride.

In 1845, Wohler establishes the specific gravity (density) of aluminium, and one of its unique properties - lightness.

In 1854, Henri Sainte-Claire Deville (France) improves Wohler's method to create the first commercial process.

In 1855, a bar of aluminium, the new precious metal, is exhibited at the Paris Exhibition.

In 1885, Hamilton Y. Cassner (USA) improves on Deville's process. Annual output was 15 tonnes.

In 1886, Hamilton Y. Cassner (USA) improves on Deville's process. They discovered that if aluminium oxide is dissolved in a bath of molten cryolite and passed a powerful electric current through it, then molten aluminium would be deposited at the bottom of the bath. 

Smelting Technology

In 1888, the first aluminium companies were founded in France, Switzerland and the USA.

In 1889, Karl Josef Bayer (Austria), son of the founder of the Bayer Chemical Company, invented the Bayer Process for the large scale production of alumina from bauxite. 

In 1900, the annual output was 8 thousand tonnes; in 1913 it was 65 thousand tonnes; in 1920, 128 thousand tonnes; in 1938, 537 thousand tones and in 1946, it was 681 thousand tonnes respectively.

Aluminium has only been produced commercially for 146 years and is still a very young metal. Annual primary production in 1999 was about 24 million tonnes and secondary - recycled - production to some 7 million tonnes.

Profile Of The Alumina Industry

The Alumina industry is highly concentrated, with just five plants in India accounting for the entire production capacity of 702000 tonnes per annum. The capacity and production figures for these producers are given below:

Company Location Present CapacityBALCO Korba 720000HINDALCO Renukoot (U.P) 660000INDAL Belgaum 240000MALCO Mettur 200000NALCO Damanjodi 1575000Total   27,97,000 

The per capita consumption of aluminium in India is only 0.5kg as against 25kg in USA, 19kg in Japan and 10kg in Europe. Even the world’s average per capita consumption is about 10 times of that in India. The reason of low consumption in India is vastly different from that of developed countries. The demand for aluminium is expected to grow by about 9 percent per annum from present consumption levels. This sector is growing through a consolidation phase and existing producers are in the process of enhancing their production capacity so that a demand supply gap expected in future is bridged. However, India is a net exporter of alumina and aluminium metal at present.  

Features Of Aluminium Industry 

Aluminium industry in the country is mainly controlled by two private groups and one public sector unit. Bayer-Hall-Heroult technology is used by all producers. The primary energy inputs are electricity, coal and furnace oil. All plants have their own captive power units for cheaper and un-interrupted

power supply. The energy cost is 40% of manufacturing cost for metal and 30% for rolled products. Plants have set internal target of 1-2% reduction in specific energy consumption in the next 5-8 years. Energy management is a critical focus in all the plants. Two plants have declared formal policy. Each plant has an Energy Management Cell. Achievements in energy conservation are highlighted in the Annual Report of the company. Energy targets are based on best energy figures achieved in their sector / region and by the plant itself in the past.   Generally, government policies were rated as conducive to energy management. ‘Task Force’ formed by BEE in this sector to work as catalyst in promoting energy efficiency. High cost of technology is the main barrier in achieving high energy efficiency. 

Industry Structure: 

Aluminium industry can be broadly classified into 2 different segments, namely, Primary aluminium producers who sell virgin aluminium metal and Secondary fabricators of aluminium who buy aluminium metal in the form of ingot, slab, wire rod etc. from the primary producers. The secondary segment is further divided into different sub-segments depending up on different usage pattern of aluminium. The industry structure in primary market is oligopolistic in nature. There are only a few big players in primary aluminium market who dominate domestic market and also have a considerable position in export market. 

In  primary segment the aluminium is sold in the form of slabs, ingots, wire rods, strips, and coils etc. the major players in primary market in India are HINDALCO, NALCO, BALCO, INDAL, and MALCO. 

In secondary aluminium market there are many fabricators who buy aluminium from the primary aluminium producers and fabricate into different down stream products. In the downstream there are several companies in small and medium scale. In the secondary fabrication units the product can be divided into three categories, e.g.

I) redrawn wire rods;

II) rolled products and

III) extrusion products. 

Each category can again be sub-divided into different segments.

The secondary segments can be broadly classified as follows:

I.    Automotive market.

II    Packaging.

III.  Infrastructure.

IV. Consumer durables

V.   Defence production.

VI.  Other aluminium products. 

The aluminium consumption is increasing in the automobile manufacturing and packaging industries especially in food products, soft drinks and beer industries. As the economy is growing the world over, the usage of aluminum in infrastructure like in power sector, buildings, roads, telecommunication, aviation etc. is increasing leaps and bounds. Due to the excellent electrical characteristics of aluminium metal, its usage in making electrical bus bars and cables is increasing by leaps and bounds. Now a days, aluminium containers are being manufactured for being light weighted. In the consumer goods segment, aluminium is also used extensively. Due to its excellent conducting properties, aluminium cables and bus bars are getting increasing acceptance. 

Aluminium usages in different sector (%) 

Sector % of usesElectrical 33Consumer Durable 11Transport 20Building & Construction 09Industrial 04Packaging 12Others 11TOTAL 100   

Analysis Of Elements Of The Industry: 

From the elements of industry structure it can be ascertained that there are a few players due to high entry barriers such as high capital cost, restricted access to high technology and long gestation period. As the cost of capital is very high the investment cost is also consequently very high. Also, the economy of scale can not be achieved for small size plants. Economy of scale playa a very important role and crates a barrier for new entrants. However due to lowering of import duties since 1992 the domestic prices of aluminium is now linked to prices of London Metal Exchange (LME) and hence primary market can be considered to be competitive in spite of limited number of players. But there always has been a gap between demand and supply position; hence the pricing of aluminium, determined by market forces, always favours the producers. 

Buyers do not have much bargaining leverage. The buyers are normally not very price sensitive due high demand for the product. Cost of investment being very high, buyer’s ability to integrate backward is very remote. Suppliers play a major role as they affect the cost of production. Hence most of the major primary players have integrated aluminium plants starting from mining to final products of aluminium. Since big players like NALCO and HINDALCO etc. have their own alumina refinery and power plants, for major items they do not depend upon outside sources. This advantage definitely reduces the transaction cost of the companies. The cost of switching suppliers for other raw materials is very insignificant or involves very little risk. Other raw materials are easily available and hence brand of supplier does not play any role. 

The threat of substitution determines the future of aluminium industry. There can be threat for product substitution and / or generic substitution for aluminium metal. In comparison to wood, steel, concrete, bricks, paper, plastic etc. aluminium is expensive, so it is difficult to compete with these products. However it has some special properties which other materials can not match. In power sector it competes with copper which is more expensive than aluminium.  Till now no better substitute for aluminium has been developed. However the threat of substitute has a bearing on the demand for aluminium products and this in turn limits the margin for both primary and secondary producers. 

The competitive rivalry among the firms is not extensive but slowly it is gaining momentum. It can be said that in the primary segments the competitors are in

balance. As far as collaboration between competitors is concerned, the recent takeover of INDAL by HINDALCO can be seen as an indicator of the things to come. The coming together of the two aluminium majors has brought about a dramatic change in the overall scenario and is a pointer towards the effects of liberalization on the aluminium industry in India. 

Industry structure in secondary value added market segment   is fragmented with large number of secondary producers. The market is highly competitive in the secondary segments because of large number of players and quality and cost sensitive customers. 

Present Industry Trends 

Trends in Indian raw alumina and aluminium production show an increased demand and plans production sites. Enlarging the production facilities is planned in Orissa and Bharat. The bauxite mining capacity will be increased to 6.3 million tons per annum. Increase in production capacity is planned for both aluminium products at Hindalco as well. 

Prospects Of The Industry

The prospects of the aluminium industry seem bright. While the demand for the metal is expected to show a steady growth of 3%-4% globally, on the domestic front, the prospects are even better with growth expected to be in the vicinity of 6%. The government's thrust on infrastructure in itself could emerge as a crucial growth driver in the long run. The power sector is the sector's largest consumer. Passage of the Electricity Act 2003 is another positive indicator for the sector, as it encourages players to venture not only into generation of power, but also set up transmission and distribution facilities. Besides, economic recovery will aid demand from packaging and consumer durable sectors, and consequently fuel revenue growth. Thus, considering the fact that the per capita consumption of aluminum in India is very low and India is an emerging market, the long-term demand outlook remains positive.

For the first time in the past five years, the aluminium industry is moving with a sense of purpose and direction.

The process of consolidation, sparked off in the primary metals segment with the acquisition of Indian Aluminium Company (Indal) by Hindalco Industries and Bharat Aluminium Company (Balco) by Sterlite Industries in recent years,

is slated to reshape the markets dynamics significantly. That, coupled with the moves by the integrated aluminium majors to aggressively expand into the downstream segment, has helped a few key players emerge as vertically integrated producers.

Nalco’s relative strength:

As a public sector major, Nalco has not moved as aggressively as its private sector peers Hindalco and Sterlite. But within its limitations, Nalco has created three drivers to earnings growth. Unlike Hindalco, Nalco has all along contemplated the brownfield expansion model for growth. The first driver is the expansion of the bauxite mines and alumina refinery to provide inputs to its expansion project for primary metal. The first phase of expansion of alumina refinery was completed in June 2000 and that enhanced the alumina refinery production capacity to 1.575 million tonnes from 0.80 million tonnes earlier. In the second phase expansion, the capacity of aluminium refinery is going to be 2.1 million tonnes per annum.

The company has also doubled bauxite mining capacity from 2.40 million tonnes to 4.80 million tonnes, which is going to be further expanded to 6.3 million tonnes per annum.

In completing the first phase expansion, Nalco has paved the way for the second driver of earnings growth. The smelting capacity has been expanded from 2.30 lakh tpa to 3.45 lakh tpa, which is going to be further expanded to 4.60 lakh tpa. The capacity of Captive Power Plant which was raised from 720 MW to 960 MW, is now going to be expanded to 1200 MW.

Since Nalco had no downstream production to create scope for value addition, it decided to create its third engine of growth by taking over International Aluminium Products, a joint venture originally promoted by Mukand, FATA Hunter and Global Emerging Markets, a foreign investor. Nalco earlier held a 35 per cent equity stake in the venture and this project, located adjacent to its smelter in Angul, Orissa, has a capacity of 50,000 tonnes of cold rolled products. The project has since been commissioned as a Rolled Product Unit. 

Graphical Representation Of Aluminium Industry Growth In The Economy

The Indian aluminum industry had a modest beginning in the 1930s and has since grown steadily. Indian aluminium plants suffer from disadvantages of

limited size, relatively high energy consumption and lower productivity compared to some of the plants abroad. However cost of bauxite is a favorable factor and the cost of production compares well with those best plants abroad. Energy consumption and current efficiency in the Indian smelters are somewhat unfavorable and there is ample scope for improvement. Waste treatment in alumina and aluminium plant has received considerable attention. The following graphical representation will give a clear scenario of the growth of aluminium industry: 

ALUMINIUM SCENARIO 

TOP 5 PRODUCERS

                                                       

                                         

WORLD 

                                                                                               

                

INDIA   

         

TOP 3 PRODUCERS 

                                       

              

Thus, the world Alumina production and consumption grew by 6.2% and 6.6% approximately during the year 2004-05 as compared to the previous year.

The world supply and consumption grew by 6.6% and 6.9% approximately during this year as compared to the previous year.

Chinese consumption is estimated to have risen by 15 and production by 20% during 2004-05.

The high demand from USA, Europe, Brazil, China and South Korea helped strengthen the international prices during the year 2004-05.             

           

 

          CHAPTER- 4 

              

      COMPANY PROFILE  

ORIGIN-HISTORY OF NALCO 

   The discovery of over one billion tones of bauxite deposits in the east coast of India in the mid-seventies has placed India on the world bauxite map. As a major step towards exploiting these vast bauxite deposits, the Government of India established National Aluminium Company Limited (NALCO) as a public sector enterprise on January 7, 1981. The foundation stone of the project was laid by the Prime Minister of India, Late Mrs Indira Gandhi on March 29, 1981 at Damanjodi in the tribal District of Koraput, Orissa. It is Asia’s largest integrated aluminium complex, encompassing bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and port facilities. 

   Today, NALCO has completed 25 glorious years of corporate excellence. It is one of the most prestigious industrial projects in the field of alumina and aluminium making. Its impact has already been felt both in the national and international horizon. NALCO is considered to be a turning point in the 55 year old history of Indian Aluminium Industry. In a major leap forward NALCO has

not only addressed itself to the country’s need for self sufficiency in Aluminium metal, but also given the country the technological edge in productivity. This strategic metal is the best of world metals. The production of aluminium metal started just a century ago. Though youngest of all metal, there has been strong demand in the country and international market.

  Efficient planning, implementation and monitoring of the project activities as well as speedy decision making in the organization are responsible for the success and growth. 

The entire paid-up equity capital was held by Central Government. This was one of the biggest public sector undertakings set up by the Government in the eighties. Aluminium Pechiney of France, a world leader in the field, provided the technology and basic engineering for bauxite mines, alumina refinery and smelter. The complete and firm reliability of project financing was another hallmark. 

  The initial total capital cost of Rs.2408 crore was partly financed by Rs. 1119 crore   equivalent Euro-dollar loan raised through a consortium of international banks and the balance RS.1298 crore coming in from the Government of India Plan Funds. Ever since the setting up of the company and commencement of commercial production, the company has been growing by leaps and bounds including earning a considerable foreign exchange for the country by export of its products namely Alumina and Aluminium and achieving a high degree of productivity and efficiency as well as financial performance. The company has won many laurels including Star Trading House Status, APEXIL Awards etc. The profit of the company has steadily increased from Rs.18.92 crore in 1988-89 to Rs.1564.65 Crore (PAT) in 2005-06.  

  NALCO has chartered a course of international confidence in Indian industrial capability. NALCO is credited for its well-managed integrated operations in as many diverse areas as bauxite mining, alumina refinery, aluminium smelting, power generation and managing port facility.  NALCO constantly produced high quality aluminium products at completive prices for both domestic and overseas customers and established itself in national and international market in a short span of time. This in turn, helped in earning precious foreign exchange and profits for the company brought from its 2nd years of commissioning.  

Leveraging the technical collaboration with Aluminium Pechiney of France, ISO 9002 certification of quality management, LME registration of products, environment care conforming to ISO 14001, low cost operations, international

base, NALCO has continued to add value and is poised to grow further.  By 1998, the company not only achieved a zero debt status but it has gone steadily with an internally funded major expansion plan involving an investment of over Rs.3700 crores. 

  The company has five multi-locations, well-integrated, segments viz. Bauxite Mines, Aluminium Refinery at Damanjodi, Aluminium Smelter, Captive Power Plant at Angul and Port Facilities at Vizag. With low cost operations and international customer base, Nalco enjoys the status of a Five-Star Export House and a Mini Ratna company. 

   In order to strengthen its market position, Nalco has started the second phase expansion after the successful completion of the first phase. The present Rs.4091 crore expansion will considerably raise the capacities of its various segments. 

  Thus, NALCO heralded a new era of Aluminium making in the country, not only in the use of modern technology but also in production of world standard aluminium products. 

MISSION 

The broad mission of the company is: 

“to achieve growth in business with global competitive edge providing satisfaction to the customers, employees, share holders and community at large”. This has been clearly spelt out in the Company’s Memorandum & Articles 0f Association. Thus, employee satisfaction is a part of the Company’s broad mission and is a thrust area. 

OBJECTIVES 

To maximize capacity utilization.

To optimize operational efficiency and productivity.

To maintain highest international standards of excellence in product quality, cost efficiency and customer service.

To provide a steady growth in business by technology up gradation, expansion and diversification.

To have global presence and earn foreign exchange.

To maintain leadership in domestic market.

To maximize return on investment.

To develop a strong R&D base and increase business development activities.

To maximize internal customer satisfaction.

To foster high standards of health, safety and environment friendly products.

To participate in peripheral development of the area.

To instill financial discipline at all level for achieving cost and budgetary controls, optimize utilization of working capital and effective cash flow management.

To promote a result oriented organizational ethos and work culture that empowers employees and helps realization of individual and organizational goals. 

NATURE OF ACTIVITIES 

    The main activities of Nalco are production of alumina and aluminium. For this the company has the following units of activities: 

(A) CORPORATE OFFICE 

The corporate and registered office of Nalco is situated at Bhubaneswar, the capital city of Orissa.  It is housed in a magnificent building named Nalco Bhawan built in lines with the temple architecture of Orissa. 

    (B)  PRODUCTION UNITS 

Bauxite mines 

    Nalco’s bauxite mining, on Panchpatmali hills of Koraput district in Orissa, is among the most sophisticated and eco-friendly mining operations to be found worldwide. Highly mechanized, the open cast bauxite mining of Nalco features geo-statistics application and

computerized mine planning. The transportation of ore to alumina refinery, located downhill, is done through a 14.6 kilometer long, single-flight, multi-curve, cable belt conveyor of 1800 tph capacity. Taking advantage of the topography, this conveyor is an engineering marvel. Nalco’s bauxite mining facility is capable of producing 48,00,000 tonnes of bauxite per annum, from a captive deposit of about 310million tonnes, spread over 16 square kilometers, with an average overburden thickness of 3 meters. The capacity of bauxite mining is presently being expanded to 63,00,000 tonnes per annum.  

Alumina Refinery 

         The 15, 75,000 tpa energy efficient alumina refinery, having three parallel streams of equal capacity, is located in the picturesque valley of Damanjodi, in Koraput district of Orissa. One among the top ten alumina refineries in the world, this plant utilizes time tested Bayer Process technology of atmospheric pressure digestion at low temperature. Manufacturing of 26,000 tpa special grade alumina and hydrate as well as 10,000 tpa detergent grade zeolite are well integrated with the main process streams. Apart from distributed digital process control, co-generation of power from process stream, using 3x18.5 mw back pressure turbo generator sets, is yet another unique feature of the refinery. 

Aluminium Smelter 

   Based on the state-of-art 180 KA cell technology of Aluminium Pechiney, the smelter has a capacity to produce 3,45,000 tonnes of Aluminium per annum. Located at Angul in Orissa, the smelter complex consists of two pot-lines with 240 electrolytic pot cells in each, along with integrated facilities for production of carbon anodes, casting of ingots, sows, billets, strips and wire rods. The self-reliance of smelter comes from the assured supply of calcined alumina from the company’s refinery at Damanjodi and 410 mw of uninterrupted supply of power from the captive power plant located nearby. Capacity of smelter is presently being expanded to 4,60,000 tpa. 

Captive Power Plant 

   The captive thermal power plant at Angul is another showpiece in efficient and reliable power generation. It’s also connected to the state

grid for sale of surplus electricity. The 960 mw unit, comprising a cluster of 8x120 mw turbo generator sets, features micro-processor-controlled burner management, computerized data acquisition and process control, automated turbine run-up, brushless excitation of generators and continuous coal handling systems for optimum, efficiency and quality in power supply. To meet future needs the capacity is being expanded to 1200 mw. 

(C)  PORT FACILITIES 

   Nalco has a dedicated port facility at the inner harbour of Visakhapatnam Port on the Bay of Bengal with integrated handling and storage facilities for bulk export of alumina and import of caustic soda lye. Ships up to 35,000 dwt cargo holding capacity can be berthed here. The storage facility is up to 75,000 tonnes and this gateway to overseas market can reliably handle export of about one million tones of alumina per annum. 

(D)   MARKETING / REGIONAL OFFICES 

  The marketing / regional offices of Nalco are located in New-Delhi, Kolkata, Mumbai, Chennai, Bangalore and Paradip. 

(E) RESEARCH & DEVELOPMENT 

  Nalco’s R&D centre at Damanjodi is recognized by DSIR, Ministry of Science and Technology, Government of India. The in-house Research & Development efforts   in the direction of process improvement, energy conservation, promotion of indigenous technologies, commercial utilization of wastes and development of value added products, have been beneficial to the company’s operation.  

  Nalco’s collaboration with premier research laboratories of the country has resulted in several research initiatives in alumina and aluminium. Development of indigenous technology for production of detergent grade zeolite has leadership to the establishment of 10,000 tpa Zeolite-A Plant by the company. Also based on the collaborative research, Nalco has set up facility for making 26,000 tpa special grade alumina and hydrates. 

  Development of synthetic granite, wear-resistant ceramics from fly ash and synthetic wood, ferrite cement, wear-resistant cast iron and micro alloyed steel from red mud are some of the other achievements on pilot scales. Recovery of iron from red mud with Romelt process is under feasibility study. 

  While continuing its R&D efforts in right earnest, the company has already obtained patents for certain special types of aluminas and hydrates.   

PRODUCTS 

  Along with standard aluminium ingots and sows, which are registered with London Metal Exchange, the Nalco product enjoys world wide reputation on account of high standard of customer services. The product-mix is given below: 

Alumina 

Aluminium hydrate

Calcined alumina

Specialty aluminas & hydrates

Detergent grade zeolite 

Aluminium Metal 

Standard ingots

Sow ingots

Alloy ingots

Wire rods

Billets

Cast strips, etc.

Flat Rolled Products (coils and sheets) 

ENVIRONMENTAL PROTECTION 

  Nalco is a responsible steward for the protection and care of the environment. Use of eco-friendly process, safe handling of materials, monitoring of occupational health, efforts at greening-of-the-land, preparedness for disaster management are all integral to the company’s

Commitment to nature and society. Extensive care is taken in the management of fly ash, caustic red mud and fluoride – the three major pollutants associated with Nalco’s operations. The highest level of ecological performance is a standard requirement for the company and the responsibility of the entire workforce. The ISO 14001 certification of all production units and winning of Indira Priyadarshini Vrikshamitra Award, a national honour, bear testimony to Nalco’s concern for environment. 

PERIPHERAL DEVELOPMENT 

  Nalco as a responsible corporate citizen has been undertaking development of peripheral villages’  right from the inception of the project and has been fulfilling its social responsibility to the surrounding community through promoting agriculture, health, education, cultural and sports and building rural infrastructure. Nalco is spending 1% of its annual profit towards peripheral development every year thereby increasing the quality of life of the people of villages surrounding its units of activities. 

HUMAN RESOURCES 

  Nalco is a reservoir of 7000 plus high-value human resources, whose knowledge and skill-base are among the best in India. Professionalism and teamwork are fused with personal responsibility to enhance performance at all levels, through appropriate organizational structures and empowerment. The compensation and reward systems, as well as the employee’s welfare and social security schemes provided by the company are among the best in the country.              

 COMPOSITION OF MANPOWER OF NALCO: 7085  

Category Mines Alumina TotalExecutives 90 420 510Supervisors 35 65 100Skilled & high skilled 309 996 1305Unskilled & semi-skilled 79 356 435Total 513 1837 2350 

SC / ST REPRESENTATION IN MANPOWER STRENGTH

(AS ON 31.12.2008)  

Group SC ST Others TotalA 67 36 407 510B 207 206 516 929C 112 235 450 797D 11 28 75 114Total 397 505 1448 2350                       

Total Manpower of NALCO:  

                          

ORGANIZATIONAL CHART OF M&R COMPLEX, NALCO  

                                                                                                 

 

  

ED (M&R) :- Overall in charge of M&R complex and all7 functional levels GMs     

                      are reporting. 

GM(Mines) :- In charge of mines operation & maintenance. 

GM(Project):- In charges of respective area of operation and i.e; 

                       head of production, mechanical, Electrical, Steam generation

                       department (HOD) plant, Electronic & Instrumentation, civil ,

                        Purchase stores, Finance, Human Resources Development,

                        Administration, Training, Peripheral Development. 

GM (AR) & GM (O&M) :- In charge of Alumina plant operation & maintenance. 

GM (Materials) :- In charge of purchase & stores function of M&R Complex.

GM (H&A) :- In charge of HRD & Administration of M&R Complex. 

GM (Finance) :- In charge of Finance & Accounts of M&R Complex.                  

ORGANISATION CHART OF HRD DEPARTMENT 

                                                                                                                                                                                                    

 

                                                                                 

 

 

 

                                                                           

 

MINES AND REFINERY COMPLEX 

  The Bauxite Mines and the Alumina refinery situated at Damanjodi in the district of Koraput (Orissa) constitute the Mines & Refinery Complex, headed by Executive Director (Mines & Refinery). The productions units, namely Bauxite Mines and Alumina Refinery are headed by General Manager (Mines) and General Manager (Alumina Refinery) respectively, who report to the Executive Director (Mines & Refinery). The common services of Mines & Refinery Complex like HRD & Administration, Finance and Materials Management are headed by General Manager (HRD & Administration), Genera; Manager (finance) and General Manager (materials) respectively and they also report to the Executive Director (Mines & Refinery). 

ALUMINA REFINERY 

The Alumina Refinery is situated at an altitude of about 3000 feet from mid sea level in the District of Koraput. The Unit operators under the administration Control of General Manager  ( Alumina Refinery) who is assisted by  General Manager (Operation & Maintenance) and other Heads of Department like Operation, Steam & Power Plant, Mechanical Maintenance, Electrical Maintenance, Control & Instrumentation,  Civil Maintenance, Environment & Safety, TQM, Research & Development, HRD & Administration, Finance, Materials Management etc. The functions of various departments are indicated below briefly: 

DESCRIPTION OF VARIOUS DEPARTMENTS OF ALUMINA REFINERY 

OPERATION DEPARTMENT: 

  This department is headed by DGM (Operation) and is mainly responsible for production of Alumina Hydrate, Calcined Alumina. In addition to the above, a special grade alumina is also produced which has a high demand in the market. Recently, a zeolite plant has also been ser up under the operation

department which has also started production. The department runs in three shifts.  

STEEM & POWER PLANT: 

  This department is headed by DGM (SPP). The functions of this department are to produce steam and electric power that are required in the process of production of alumina. The steam is generated by way of coal gasification and electricity is produced as a bi-product with the help of three turbo generators of 18.5 MW each. In addition a De-mineralized Water Plant which is required for the boilers.  

MECHANICAL MAINTENANCE DEPARTMENT: 

  This department functions under DGM (Mechanical). The main components of the Mechanical Maintenance department are Plant Maintenance and Mechanical Workshop. The field maintenance staffs attend to various maintenance of plant & machinery. The mechanical workshop has all modern machineries and various equipment are brought to the workshop for repair.  

ELECTRICAL MAINTENANCE DEPARTMENT: 

  This department is responsible for maintenance of electric distribution lines in plant and township as well as electrical repair of various equipment like motors, fans etc. This department has a central distribution station through which distribution of electricity is ensured. This department is headed by DGM (Electrical).  

CONTROL AND INSTRUMENTATION DEPARTMENT:  

  Alumina Plant being a sophisticated process plant, there are a good number of control equipment and electronic instruments. The control and instrumentation department under DGM (C&I) is responsible for repair and maintenance of these equipment / instruments. Further, an intercom telephone exchange also functions under DGM (C&I).  

CIVIL DEPARTMENT:  

  This department takes care of the maintenance of plant & non-plant buildings, residential houses in the township, roads and other infrastructure of the company. The water supply to plant   & township is also looked after by

this department under the leadership of DGM (Civil).  

QUALITY CONTROL, RESEARCH & DEVELOPMENT DEPARTMENT: 

  This group is headed by DGM (R&D).The department has a modern sophisticated laboratory with latest equipment along with a fleet of highly qualified chemists. Samples taken from various stages of the process are taken and tested in the laboratory based on the test results the various production parameters are kept within normal units. 

  The Research & Development wing is manned by highly qualified and component researchers who are continuously engaged in Research & Development work. The zeolite plant and the special grade alumina plant set up inside the alumina plant premises are based on the projects developed by Nalco’s own R&D department. The  R&D department has, to its credit, developed a number of projects on manufacture of ash bricks out of the fly ash, red oxide paints, flow tiles, door panels etc from red mud and so on. 

ENVIRONMENT & SAFETY DEPARTMENT    

  This department is headed by CM (E&S). The department is in charge of Safety Management, Environment Management, Pollution Control and liaisoning with statutory bodies under the Factories Act and other applicable laws. The E&S department has successfully worked in getting ISO-14001 certification for the plant. The OHSAS (Occupational Health and Safety Management System) has also been implemented in the plant with active involvement of E&S department. The safety aspects of the plant are regularly monitored through the Safety Committee, while the environmental aspects are monitored through Environment Management Committee. Disposal of solid wastes like lime grit, dry mud etc, are monitored strictly. The ash & red mud generated from the plant are transported through pipes in slurry form to avoid pollution control.

The E&S department works closely with the Occupational Health Centre. The Occupational Health Centre is headed by a qualified doctor in the line supported by an industrial hygienist and other para-medical staff.   The centre is equipped with modern testing / diagnostic equipment for Automatic Test, Eye Test, ECG, Auto Analyzer etc, to diagnose any diseases arising out of occupational hazard if any. The Occupational Health Centre which is attached to Nalco Hospital conducts periodical medical examination of all employees at regular intervals. In addition the effects of noise, dust and chemicals on

human body are also studied regularly to avoid any occupational health hazard.  

TQM DEPARTMENT  

  Quality forms the core of the business philosophy of Nalco. Meeting the needs and expectations of the customer and consistently improving the systems and work ethos are the chosen path in achieving excellence in business and fulfilling the social obligations. Therefore a full-fledged department known as Total Quality Management (TQM) department has been created in Alumina Refinery under the charge of CM (TQM). The department through continuous education, workshops, presentations etc, has created a quality consciousness among the people and elicited trust among the customers. With active involvement of the department, alumina plant has got ISO-9001: 2000 certification for its process. A number of quality circles have been formed in the plant which have participated in National and International level conventions and have won laurels for their contribution to quality circle movement. Presently, total productivity maintenance (TPM) has been introduced in the plant. 

FINANCE DEPARTMENT  

  This department is headed by the general manager (finance). The department looks after the financial requirements of the other departments and allots the finance to them respectively. It co-ordinates the financial activities of them M&R complex with the corporate office which allots the finance for the activities in this segment. It has to prepare reports regarding the expenditure in details and submit it to the corporate office at Bhubaneshwar. Before the amount of money is allocated to each department, every department has to submit a report mentioning the financial requirements and then according to the feasibility the finance is allocated. The departments have to keep the finance department updated with the various transactions by the means of monthly statements. 

MATERIALS DEPARTMENT  

  The materials department is responsible for purchase of materials, stores, inventory control, scrap disposal, taxes & duties, excise etc. the maintenance segments of the department are Purchase, Central Store and Excise, each headed by a DGM / Chief Manager under the control of General Manager (Materials) of M&R Complex. 

HRD & ADMINISTRATION DEPARTMENT  

  This department is headed by GM (HRD & Admn.) assisted by DGM (HRD & Admn) and a team of other executives. The HRD Department looks after Manpower Planning, Recruitment, Employee Establishment Matters, Wage & Salary Administration, Industrial Relations, Welfare, Contract Labour Management, Training & Development and Statutory Reports & Returns.  

  The Administration Wing deals with Estate & Township Administration , Law & Order, Security, Protocol, Hospitality, Transport Pool, Liaison with Government agencies, Rehabilitation, Peripheral Development , Furniture & Stationery, Raj Bhasa Cell, Sanitation and Horticulture etc. 

ORGANISATIONAL STRUCTURE OF HRD DEPARTMENT: 

  In any organization HRD department plays an important role in managing and controlling the overall administration of the organizational activities. The internal organizational structure of HRD department varies widely in different companies depending upon their size and philosophy.  In NALCO, the Head of HRD & Administration reports to the Head of Mines & Refinery Complex i.e. Executive Director (M&R).While the GM (HRD & Admn) renders functional advice to Executive Director (M&R), the DGM (HRD & Admn) supported by Chief Manager (HRD) and a team other HR executives renders functional advice to General Manager (Alumina Refinery) in matters relating to HR of Alumina Refinery. Functions like Recruitment, Promotion, Training & Development etc. are handled by a separate group under DGM (HRD & Admn) commonly for Mines & Alumina Refinery. Manpower Planning is looked after by the Industrial Engineering Wing which reports to GM (HRD & Admn). 

ROLE OF HRD DEPARTMENT IN THE ORGANIZATION: 

  The HRD Department has staff relationship with other departments / managers in the total organization. It is responsible for advising line management and top management on all areas relating to the Human Resource Management. There has been a sea change in the role of H R Manager to-day. He is no more confined to welfare and industrial relations functions. With the change in the business scenario giving rise to stiff competition among industrial organizations and advancement of technologies, the human resources have to be kept ready all the time to face the challenges and development of human resource is one of the key roles of an HR Manager. To-day the role of HR Manager is that of a change agent and he is regarded as the employee champion. 

  Keeping the above in view, the HRD Department in Nalco has gone beyond its traditional roles and has embarked upon a slew of new functions. With ISO 9001: 2000 certification and implementation Total Productivity Maintenance (TPM), training and development has assumed great importance. Competency mapping and bridging the gap in competency through well devised training programmes has been the thrust of the time. 

THE PHILOSOPHY OF NALCO IN THE FIELD OF HR

 

  NALCO has a well defined comprehensive policy on HR, which states as under:

To attract competent personnel with growth potential and develop there skills and capabilities in a congenial work and social environment through opportunities for training, recognition, career advancement and other incentives.

To develop and nurture favorable attitudes among the employees and to obtain their best contributions to the organization by providing stable employment, safe working conditions, job satisfaction, quick redressal of grievances and through good pay and welfare amenities commensurate with the company’s capacity to spend and the government’s guidelines.

To foster fellowship and sense of belongingness among all sections of employees with the management through closer association of employees with the management and by encouraging healthy trade union practices. 

HRM POLICIES 

  Policies are general statements that guide thinking and action in decision-making. A policy is a plan of action. Each organization has its own policy. In Nalco, the company has a codified personnel policy, which is circulated in the form of a manual known as HRD manual. Further a hand book entitled “The Company You Keep” codifying salient points of various rules, has been made and issued to each employee. Moreover, the rules are also available in the Company’s intranet and website. The various functions in HRD department are carried on in  line with the guidelines provided in the policy. This policy is

formulated by the Board Of Directors of the company and implemented by various levels of management as per the delegation of powers. 

SCOPE OF THE POLICIES 

  The HRD policy covers the areas of manpower planning, recruitment, placement, maintenance function, wage and salary administration, training and development, separation etc. with emphasis on human resource development. The company regards its employee as assets and keeps on upgrading their skills, knowledge and competence so as to make the human potential match with the organizational needs. Policies get amended from time to time depending upon the need of the organization within the framework of law and Government guidelines. 

FUNCTIONAL AREAS OF HRD DEPARTMENT 

  The functions of HRD may also differ from one organization to another depending upon the size of the organization, management philosophy and HR policy followed by the company. In Nalco, the HRD department has overall responsibility for dealing with human resources in the company.  

The main functions of HRD are:  

(a) Manpower Planning

(b) Recruitment and Selection

(c) Employee Relations/ Establishment functions

(d) Wage and salary administration.

(e) Industrial Relations

(f) Welfare

(g) Contract Labour Management

(h) Training & Development

(i) Performance Appraisal

(j) Employee Motivation. 

RECENT TRENDS 

  Nalco is sensitive to the recent trends in industry and has understood that for success to be permanent, there must be constant change. Nalco as a corporate citizen has been trying to come to terms with the speed and frequency of the ongoing changes in the market. It is relentlessly redefining its role vis–a-vis the fleeting and fluctuating demands of the market in order to survive and grow. The company has realized that competitiveness is no longer confined to markets only, but it includes people as well. 

  Nalco is consolidating its position as a leader in Alumina / Aluminium industry by aggressively expanding its activities and introducing various schemes to upgrade human competency. 

SECOND PHASE EXPANSION OF NALCO 

  After successful completion of first phase expansion, Nalco has started the second phase expansion after the successful completion of the first phase. The company is planning further brownfield expansion as well as new greenfield projects in India and abroad. This will ensure better value addition of its surplus alumina that will be available after the second phase of expansion. The present Rs.4091 crore expansions will raise the capacities of its various segments as under: 

Segment Capacity LocationBauxite Mines 63,00,000 Panchpatmali hillAlumina Refinery 21,00,000 MT DamanjodiAluminium Plant 4,60,000 MT AngulPower Plant 1200 MW AngulPort Facilities 35,000 DWT Visakhpatnam 

ACQUISITION OF ADDITIONAL MINING AREA 

  Keeping in mind future growth plans, Nalco has applied to the state government for lease of additional mining areas at Pattangi having deposit of  about 75 million tonnes, Kodingamali having deposit of 90 million tonnes and Gandhamardan hills having deposit of about 150 million tonnes of Bauxite. 

  Nalco is also hoping for setting up export oriented joint venture projects, for which interest has been shown by overseas producers. 

COMPETENCY MAPPING 

  Products and processes change so fast that most of the skills become obsolete within 4 to 5 years. There should be constant effort to upgrade the skills and  competencies of the employees. As a part of ISO certification, competency mapping has assumed great significance in Nalco. The competency of all the employees is being regularly assessed keeping in view his/her skills, key performance area, etc. Gap if any, is bridged through suitable training programmes.  

OTHER INTERVENTIONS 

  After tremendous success in implementation of total quality management (TQM), the company has moved to implementation of total productive maintenance (TPM). The alumina plant is first to implement the TPM.  

COMMUNITY DEVELOPMENT 

  Nalco has been representing a better quality of life for communities residing in the vicinity of its plants and facilities. After addressing the problems of rehabilitation of displaced families with adequate compensation, housing and employment, the company has created infrastructure in the surrounding villages for communication, education, health care and drinking water. With stabilization of production, the company has enhanced its thrust on peripheral development by diverting one percent of its profit every year. The company firmly believes that its ultimate reward is happiness in the human heart. A massive plantation programme has already started in the peripheral area. 

FINANCIAL STATEMENTS 

  NALCO has remained the forerunner with best quality of products over the years. Financial results of the company reflect the company’s robust performance in production and marketing. Sales turnover and net profit have grown over the years. 

  Zero debt status of the company has made the position of the company very strong for any fresh borrowing market. Government of India has also given green signal to Nalco’s proposal for equity restructuring. Hence Nalco’s position in the financial market has become strong, all these have enthused Nalco to invest further in down stream facilities to diversify and spread its operations.

FINANCIAL PERFORMANCE 

   2005-06 2006-07 2007-08

Sales turnover

Net Profit(PAT)

Export Earnings

Equity Capital

5324

1562

2306

24.25

644

6515

2381

2585

36.96

644

5474

1632

2134

25.33

644

PROFIT & LOSS ACCOUNT FOR THE YEAR ENDED MARCH31,2007-08

 

                                                                                                 March 31, 2008

March 31, 2007

INCOME:    GROSS SALES 5,474.45 6,514.51

LESS: EXCISE DUTY 485.65 574.32

NET SALES                     4988.80

                5,940.19

FINISHED GOODS INTERNALLY COMSUMED/ CAPITALIZED                         31.65

                   12.35

OTHER INCOME                       554.77

                 401.65

                                                              SUB TOTAL                    5,575.22

               6,354.32

EXPENDITURE:    DECRETION/(ACCRETION) TO STOCK OF FINISHED/ INTERMIDIARY PRODUCTS/ WORK-IN-PROCESS

                     (21.85)

                 (15.13)

RAW MATERIAL CONSUMED                       574.36

                  557.59

POWER AND FUEL                       994.69

                  851.02

REPAIRS AND MAINTENANCE                       231.54

                  230.34

OTHER MANUFACTURING EXPENSES                       163.82

                 152.66

EMPLOYEES' RENUMERATION AND BENEFITS                       552.97

                  392.88

ADMINISTRATIVE EXPENSES                                          

106.74 85.37

OTHER EXPENSES                       113.97

                    72.55

SELLING AND DISTRIBUTION EXPENSES                         84.74

                    76.98

INTEREST AND FINANCING CHARGER                           1.51

                      1.12

PROVISIONS                         (0.35)

                     (5.25)

DEPRICIATION                       281.10

                  317.13

                                                              SUB TOTAL                    3,083.24

                2,727.76

      PROFIT FOR THE YEAR                    

2491.98                 3626.43

ADD: PRIOR PERIOD ADJUSTMENTS(NET)                      (25.39)

                   (6.03)

PROFIT BEFORE TAX                    2,466.59

                3,620.40

LESS: PROVISION FOR TAXATION-CURRENT 849.80 1248.97

LESS: PROVISION FOR TAXATION-FRINGE BENIFIT 10.64 7.03

LESS: PROVISION FOR TAXATION-DEFERRED (5.31) (17.30)

LESS:                               EARLIER- YEARS (20.06) 0.32

                        835.07

                1,239.02

PROFIT AFTER TAX                    1,631.52

                2,381.38

BALANCE OF PROFIT BROUGHT FORWARD FROM PREVIOUS YEAR

                      36.12

                     10.49

TRANSFER FROM CAPITAL RESERVE                         0.04

                       0.04

TRANSFER FROM GENERAL RESERVE                           -                      23.04

PROVISION FOR DIFFERENTIAL ACTUARIAL LIABILITY                      (23.04)

AMOUNT AVAILABLE FOR APPROPRIATION                    1,667.68

                2,391.91

APROPRIATION:    INTERIM DIVIDEND 289.94 332.15

PROPOSED FINAL DIVIDEND 96.65 161.08

TAX ON DIVIDEND 65.70 72.56

TRANSFERRED TO GENERAL RESERVE 1,200.00 1,800.00

                                                                                  1,652.29

                2,355.79

BALANCE CARRIED TO BALANCE SHEET                         15.39

                     36.12

EARNING PER SHARE (Rs.)                         25.32

                     36.96

  

BALANCE SHEET AS AT MARCH 31, 2008 

PARTICULARS MARCH 31, 2008 MARCH 31, 2007

SOURSES OF FUNDS    SHAREHOLDERS' FUNDS    SHARE CAPITAL                          644.31                          644.31

RESERVE AND SURPLUS                          8230.14                         7050.91

DEFFERED TAX LIABILITY(NET)                           607.43                             612.74  

                                                                TOTAL                           9,481.88                          8307.96

APPLICATION OF FUNDS     FIXED ASSETS    GROSS BLOCK 9137.26 9304.06

LESS: DEPRICIATION 5606.31 5323.18

NET BLOCK 3530.95 3710.88

FIXED ASSET WAITING DISPOSSAL 0.86 1.26

CAPITAL WORK-IN-PROGRESS 2334.59 840.41

                            5866.40                         4552.49

INVESTMENT     CURRENT ASSETS, LOANS AND ADVANCES    INVENTORIES 686.65 634.96

SUNDRY DEBTORS 60.65 34.13

CASH AND BANK BALANCES 3516.46 3686.53

OTHER CURRENT ASSETS 236.47 212.04

LOANS AND ADVANCES 541.10 406.42

  5041.33 4974.08

LESS:CURRENT LIABILITIES & PROVISIONS    LIABILITIES 1,318.31 872.02

PROVISION 222.57 346.59

  1540.88 1218.61

NET CURRENT ASSETS                           3500.45                          3755.47

                                                                TOTAL                            9481.88                          8307.96

  

RECONCILIATION OF PUBLISHED QUARTERLY FINANCIAL RESULTS AND ANNUAL( AUDITED) FINANCIAL RESULTS FOR THE YEAR 2007- 2008 

Sl.No

Particular 1ST Quarter

2nd Quarter 3 rd Quarter 4th Quarter Total of four

Full year

VARIANCES

1 2 3 4 5 6 7 8 9

1 Gross Sales Turnover

1287.12 1432.12 1220.97 1533.87 5474.08 5474.45 0.37

  Less :     Excise Duty

121.89 123.97 111.66 128.13 485.65 485.65 0.00

  Net Sales 1165.23 1308.15 1109.31 1405.74 4988.43 4988.80 0.37

2 Other Income

131.00 164.39 137.95 134.96 568.30 586.85 18.55

3 Total Expenditure

548.83 739.69 669.25 838.62 2769.39 2822.11 25.72

4 Interest and Financing

Charges

0.10 0.61 - - 0.71 1.52 0.81

5 Depreciation &Provisions

69.15 68.30 66.21 75.77 279.43 285.43 6.00

6 Profit before taxation (PBT)

678.15 663.94 511.80 626.31 2480.20 2466.59 (13.61)

7 Provision for Taxtion

231.49 224.21 182.36 217.25 855.31 835.07 (20.24)

8 Net Profit (PAT)

446.66 439.73 329.44 409.06 1624.89 1631.52 6.63

9 Paid up Equity Share Capital  

644.31 644.31 644.31 644.31 644.31 644.31 -

10 Earnings per Share (Rs.)

6.93 6.82 5.11 6.35 25.22 25.32 -

11 Aggregate of non-promoter Shareholding:

- - - - - - -

  Number of Shares

8,28,09,993

8,28,09,993

8,28,09,993

8,28,09,993

8,28,09,993

8,28,09,993

-

  Percentage of Shareholding

12.85 12.85 12.85 12.85 12.85 12.85 -

ACHIEVEMENTS OF THE COMPANY 

Nalco has won many laurels over the last 25 years of its existence. It has proved its excellence by adding more and more feathers to its cap. Some of the major achievements of Nalco are indicated below:  

Received CAPEXIL Export award consecutively for 17 times since 1988.

Obtained LME Registration since May, 1989 and Star trading House Status since 1992.

All production units of NALCO are certified to ISO 9001: 2000 Standards for maintaining Quality Management System

All production units of NALCO are certified to ISO 14001 standards for maintaining the Environment Management standards.

Received Indira Priyadarshini Vrikshamitra Award in the field of afforestation and waste land development in September, 1996 and March, 2000.

The bauxite mines obtained Pollution Control Excellence Award by Orissa State Pollution Control Board in August, 1998.

Five Technologies of Nalco honoured with United Nations’ World Intellectual Property Organization (WIPO) for development of Process technology for manufacturing of Detergent Grade zeolite (Eco-friendly) using Sodium Aluminium Liquor in August, 1998.

Received Engineering Export Promotion Council (EEPC) Award for last 3 years.

Nalco’s Alumina Refinery bagged State Pollution control excellence award -2002.

Received the Best Exporter’s of Orissa Award for the year for 3rd time in succession.

NALCO Bauxite Mine bags FIMI Environment Award for 2002 for outstanding contribution to the national goal of sustainable development through environment conservation & rational utilization of natural resources.

NALCO has got a Star Trading House Status on January, 1992.

Received Indira Gandhi Rajbhasa Awards in 1993 and 1995.

NALCO has also received the excellent public sector enterprise award during 1996-97.

NALCO was also rewarded by FICCI Award for pollution control and environment during 1996-97.

In 2005 it has received the Udyog Rattan Award.