In 2015, Dr Tapan Kumar Chand took over as the Chairman-cum-Managing Director of National Aluminium Company Limited (NALCO), the largest integrated aluminium unit in Asia and one of the largest aluminium complexes of the world. Dr Chand is determined to leave his mark behind as he steers the company through choppy waters. In a tête-à-tête with Sidheswar Misra the CMD of NALCO reveals his plans for the growth of the company. Excerpts from the exclusive talk:
You joined at a time when there is a meltdown in the global market. How do you plan to navigate the troubled waters and take the company to new heights?
Given the tough going in the market, NALCO has developed a Corporate Plan with a new business model that will withstand market onslaughts and keep the company afloat with profitability. The New Business Model (NBM) shall enable NALCO to strengthen the company’s business by leveraging its core competency in mining, metals and energy sectors, through modernisation, Greenfield and Brownfield expansions and upstream and downstream integration. Besides this, the model envisages diversification into Green Power, Nuclear Power, IPP, Caustic Soda, rare metal like titanium, recovery of iron from red mud waste and merchant mining that are immune to downturn in metal market. This NBM will not only give a new dimension to NALCO’s growth plans but also redefine business sustainability.
My plan is to make NALCO healthy and to further improve its reputation at the global level in the Metals and Energy Sectors.For that we are focussed on efficiency in production, revenue growth and social contribution. One major change that is being effected is to expand NALCO to have its international presence in production. Recently, during the visit of the Prime Minister, we have signed an MoU with Iranian Mines & Mining Industries Development & Renovation Organisation (IMIDRO) to jointly explore the possibility of setting up an aluminium smelter in Iran, with supply of alumina from NALCO’s refinery in India. The MoU envisages tolling arrangement (a processing agreement for the conversion of an input product for a fee) with existing smelters in Iran for producing aluminium from alumina supplied by NALCO. It proposes to look into other business collaborations as well.
Through this MoU we could use the low-cost gas-based energy available in Iran for conversion of its surplus alumina, presently exported to international markets, for value addition and to scale up value chain.
To have a global presence, we also emphasize on our research and development wing. We have already signed an MoU with Bhabha Atomic Research Centre (BARC), Mumbai for Research and Development (R&D) cooperation in the fields of mutual interest. We will take up R&D projects like extraction of gallium from Bayer liquor, extraction of rare earth elements from red mud and Development of Reference Standards would be taken up within the framework of this MoU. The sole objective is to develop indigenous technology for this strategic metal for our country.
Before entering into the international production plan, is there any plan of expansion within India?
Recently, we have joined hands with Indian Rare Earths Limited (IREL) to set up a One-lakh TPA or Titanium Slag Project in Joint Venture, at Chhatrapur in Ganjam district of Odisha, with an investment of Rs.750 crore. As of now, the feasibility study has been done and both the parties have expressed their interest for cooperation.
Titanium is a high-end metal and NALCO aims to enter into the niche market with this venture. The company by virtue of its strong international presence would play a vital role in attracting reputed suppliers for this project. We have been scouting and in constant touch with other potential countries and global suppliers like China, Russia, Ukraine and the United States of America to get their support.
The growth of a company is a continuous process? Are you happy with your predecessors?
Every individual has different style of working and vision. I believe in hard work and focused strategy. Yes, of course it is a continuous process. Through combined efforts, NALCO has registered an all-time high production of 63,40,142 tonnes of bauxite in 2015-16 fiscal i.e. 10.47 percent higher, and 19,53,000 tonnes of alumina i.e. 5.51 percent higher than the corresponding figures of the previous fiscal.
I must tell you that this figure shows the highest-ever production since the inception of the company, for which the credit goes to the states and the Centre. We have also produced 3,72,183 tonnes of metal registering an increase of 13.79 percent as compared to the corresponding figure of the previous fiscal, which include the highest ever production of 1,01,380 tonnes of wire rods. During the year, the metal sale was higher by 14.21 percent at 3,72,424 tonnes and power generation was up by 13.84 percent at 5841 million units, as compared to previous years.
Despite sluggishness in the market, NALCO has not only registered profit, but also tried to satisfy stakeholders in terms of dividends. Recently, NALCO declared an interim dividend of 25 percent, amounting to Rs 322.16 crore for the financial year 2015-16, including the Government of India’s share of Rs 260.72 crore, on the paid-up equity share capital of Rs 1288.62 crore. NALCO, which started its commercial operations in 1987, has been earning profits consistently and has been declaring dividends since 1992. Since inception, the company has paid a total sum of Rs 5679 crore as dividend, including Rs 4860 crore as share of the Government of India.
Excellence is a journey, never a destination. The journey of NALCO has begun, which would make the company a truly global player in mining, metal and energy sectors. With concerted efforts, in 2016-17, we shall achieve the target of producing 68.25 lakh tonnes of bauxite, an increase of 7.1 percent and 21.50 lakh tonnes of alumina, an increase of 9.2 percent as compared to last fiscal. There would be a major turnaround in the business plan of the company to meet the turbulent business environment. Hitherto NALCO was regulating its production to tide over the crisis, but now the company is braving it out by augmenting production to beat margin erosion.
Where are some major gaps you perceive between NALCO and others around the world?
Firstly, I must tell you that NALCO is moving in a focussed manner and not as part of the general race. When there is a slump in the global market and when other companies are trying to reduce the production, we will strive to increase the production and sell in the market. We are not scared by the artificial dumping by countries like China.
Yes, in our company there are some gaps which we are bridging. Basically there are the major areas of production and productivity which are our prime focus. By increasing the productivity, our production quality and quantity can improve.
As an industry leader, we have our plans and preparations in place to take advantage of the upcoming industrial upsurge. With concerted efforts, in 2016-17, we shall achieve the target of producing 68.25 lakh tonnes of bauxite, an increase of 7.1 percent and 21.50 lakh tonnes of alumina, an increase of 9.2 percent as compared to last fiscal. While 2015-16 has been a seminal year for NALCO, there would be a major turnaround in the business plan of the company hereafter. Till now, NALCO was regulating its production to tide over the crisis, but now the company is braving it out by augmenting production to beat the margin erosion.
You mentioned Social Contribution. What are your plans?
We have strengthened our Corporate Social Responsibility division and the NALCO Foundation is also contributing greatly towards this.
'Nalco Ki Ladli ' is one of the schemes for meritorious girls from the lower strata of the society. This will complement the Central Government’s 'Beti Bachao, Beti Padhao' programme. As many as 50 meritorious girl students of Class VIII will get financial assistance every month for three years. Below poverty line students scoring over 60 percent marks in Class VII are NALCO’s Ladlees. The girls are chosen from the area of NALCO’s operation.
We have sponsored 655 children of Koraput district for residential education in Kalinga Institute of Social Sciences in Bhubaneswar, KDF Model School in Jeypore and Bikash Vidyalaya in Koraput. 100 more students from periphery villages of Damanjodi and Pottangi will soon get enrolled in such institutions in the current financial year.
We have also rendered our services to the Swachh Bharat Abhiyan by constructing sanitation facilities in more than 150 schools in Odisha. As a sincere PSU partner in the campaign we have so far spent around Rs 6 crore. Over 433 toilets in 202 schools in Angul, Koraput and Vizag have been constructed by us so far.
Our company has not lagging behind in ensuring healthcare in the State. We have set up a modern Eye Hospital in Angul. Over and above its own hospital, the NALCO Foundation is operating four mobile health units in Damanjodi sector in association with Mumbai-based Wockhardt Foundation. This facility caters to the daily healthcare needs of the people residing in 163 periphery villages and hamlets free of cost. Soon the company will roll out one more mobile health unit for the 36 periphery villages of Pottangi during 2016-17.
To ensure drinking water to people living in 13 villages in the vicinity of its smelter and captive power plants, we have set up a rural pipe-water supply project and also set up a piped drinking water system in Vizag.
Installation of solar lighting systems in 163 periphery villages in tribal dominated Damanjodi area speaks about the sincerity of us towards corporate social responsibility. One such system has been installed on the outskirts of the State capital. This Rs 9 crore project is being executed through Nalco Foundation.
We have a deep concern for maintaining environment as well. We have instituted Green Awards for Engineering Excellence for honouring those technical professionals for introduction and adoption of green technology in the State of Odisha. Nalco Nilambu Chilika Awards are for NGOs who work tirelessly for conservation of world’s second largest lagoon Chilika.
We have focused vision and missionary zeal that we are trying to catapult to take NALCO to newer heights in the spheres of education, health, women empowerment, culture and environment. We have a long way to go, this is just the beginning.