Professional Documents
Culture Documents
Introduction To The Aluminium Industry
Introduction To The Aluminium Industry
Download the
original attachment
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.
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.
I. Automotive market.
II Packaging.
III. Infrastructure.
V. Defence production.
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.
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.
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.
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 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.
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.
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
OBJECTIVES
To instill financial discipline at all level for achieving cost and
budgetary controls, optimize utilization of working capital and effective
cash flow management.
NATURE OF ACTIVITIES
The main activities of Nalco are production of alumina and aluminium. For
this the company has the following units of activities:
Bauxite mines
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
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
Aluminium Metal
Standard ingots
Sow ingots
Alloy ingots
Wire rods
Billets
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
PERIPHERAL DEVELOPMENT
HUMAN RESOURCES
(AS ON 31.12.2008)
are reporting.
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:
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.
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).
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
MATERIALS 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.
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.
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.
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.
(f) Welfare
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.
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:
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
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
March 31,
2007
March 31, 2008
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
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
Charges
5 Depreciation 69.15 68.30 66.21 75.77 279.43
&Provisions
6 Profit before 678.15 663.94 511.80 626.31 2480.20
taxation
(PBT)
7 Provision for 231.49 224.21 182.36 217.25 855.31
Taxtion
8 Net Profit 446.66 439.73 329.44 409.06 1624.89
(PAT)
9 Paid up 644.31 644.31 644.31 644.31 644.31
Equity Share
Capital
10 Earnings per 6.93 6.82 5.11 6.35 25.22
Share (Rs.)
11 Aggregate of - - - - -
non-promoter
Shareholding:
Number of 8,28,09,993 8,28,09,993 8,28,09,993 8,28,09,993 8,28,09,993
Shares
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:
Obtained LME Registration since May, 1989 and Star trading House
Status since 1992.
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 was also rewarded by FICCI Award for pollution control and
environment during 1996-97.