Nalco to invest Rs300 crore in nuclear project by March

National Aluminium Co Ltd (Nalco) will start investing equity into its joint venture with Nuclear Power Corporation of India Ltd (NPCIL) from the current quarter.

Nalco would invest Rs300 crore this quarter in the JV, which was signed in November 2010 to set up nuclear plants in the country.
Under its first project, the venture plans to set up units 3 & 4 of the Kakrapar nuclear plant in Gujarat. Each unit will have a capacity of 700 megawatt (mw) and will entail an investment of around Rs7,000 crore, or Rs3,500 crore per 700 mw.

Nalco sees this venture helping it de-risk its business portfolio in the long run while allowing a foray into the evolving nuclear power sector in India. K C Samal, executive director - finance, Nalco, said in a recent analyst conference call that the company had so far got an approval for an investment of 26% in the two units and would like to further raise its stake to 49%.

“We will invest Rs300 crore towards the first unit in the current quarter and in the next fiscal, another Rs600 crore in the next fiscal,” said Samal, adding once the approval for the stake is raised to 49%, the company will have to invest another Rs600 crore.

The remaining 51% investment will be made by NPCIL.
Apart from the diversification plan, the aluminium company has lined up several other mainstream brownfield and greenfield projects, with the major capex going towards the expansion of alumina refinery capacity from 5.25 lakh tonne per annum to 7 lakh tonne. The company plans to invest up to Rs5,000 crore in the project.

However, for the quarter ended December, the company failed to meet analyst expectations and posted a dismal performance by registering lowest margins and profit numbers till date.

Samal said the company was facing with a shortage of coal and also a slow ramp-up of alumina refinery which hit its margins. Besides, the company also took a one-time high employee cost.

The company posted a year-on-year drop of 84% in earnings before interest, tax, depreciation and amortisation and 80% fall in net profit. It reported 1% year-on year-drop in alumina volumes and 6% yoy drop in aluminium sales during the third quarter.