National Aluminium Company Limited (NALCO) is going ahead with a plan to nearly double the amount of aluminium it can make. The state-run company wants to add 0.5 million tonnes a year at Anugola in Odisha. The approved cost is about ₹30,000 crore, according to The Hindu BusinessLine.
NALCO is also on a list of companies with an interim dividend record date this week. So investors are looking at a long-term growth plan and a near-term payout at the same time.
What NALCO announced
NALCO is a Navratna CPSE under the Ministry of Mines, Government of India. CPSE means Central Public Sector Enterprise, a company whose main owner is the central government. Navratna is a status that gives some large state-run companies more freedom in spending decisions.
The Anugola plan is a brownfield smelter expansion. A smelter is the plant where aluminium metal is made. According to The Hindu BusinessLine, key statutory approvals, strategic partnerships and other supporting steps are in place. Statutory approvals are the permissions the law requires before a big plant can be built.
The numbers in one place
| Item | Figure |
|---|---|
| Current smelting capacity | 0.46 MTPA |
| Capacity to be added | 0.5 MTPA |
| Capacity after expansion | About 1.0 MTPA |
| Approved investment | About ₹30,000 crore |
| Extra power needed | 1,100 MW |
| Planned thermal power plant | 4 × 270 MW (1,080 MW) |
| Renewable energy planned | 200–250 MW |
The table shows that the new capacity is larger than NALCO's present smelting capacity, and that power is the biggest supporting need. All figures are from The Hindu BusinessLine.
MTPA means million tonnes per annum. It is the most a plant can make in a year when it runs fully. By our calculation, 0.46 MTPA plus 0.5 MTPA is 0.96 MTPA, which the company rounds to about 1.0 MTPA. The new part alone is a little bigger than today's capacity.
Why power is the big piece
Making aluminium uses a huge amount of electricity, and a smelter must run day and night. So the supply and cost of power matter a lot.
The expansion needs an extra 1,100 MW (megawatts) of power. For this, NALCO has teamed up with NLC India Limited to form a joint venture company, with each side holding 50%. The venture will set up a captive thermal power plant of four 270 MW units, or 1,080 MW in all.
A captive plant makes power mainly for the company's own use. Think of a shop owner who buys a generator so the lights never go off. A thermal plant makes electricity from heat, usually by burning fuel.
By our calculation, 1,080 MW is 20 MW short of the 1,100 MW needed. NALCO is also planning to add 200–250 MW of renewable energy to the project, as part of its cleaner energy goals. The reports do not say how the final power mix will be split.
Technology partner and land
NALCO has signed an agreement with Emirates Global Aluminium (EGA) to license EGA's own smelting technology for Anugola. A licence lets NALCO use a process that EGA developed. As reported, the aim is to use globally proven and energy-efficient ways of making aluminium.
Land is the other key step. A meeting of the Rehabilitation and Peripheral Development Advisory Committee (RPDAC) was held recently. Its purpose was to help get the land needed and to speed up compensation and rehabilitation. Rehabilitation means helping affected families settle in a new place.
The dividend date
Separately, NDTV Profit listed NALCO among companies whose shares had to be bought by 5 November to qualify for interim dividends. The record dates for that group are 6 and 7 November.
The NDTV Profit report summary does not give NALCO's dividend amount. It also does not say which of the two dates applies to NALCO. Please check the company's filing on the BSE or NSE website for the exact details. Our story on the Coal India dividend record date shows how such dates work.
In short, only people on the company's shareholder list on the record date get the dividend. Indian share trades settle one working day after purchase. So buyers usually need to buy at least a day before the record date.
What it means for a small investor
A bigger smelter could let NALCO sell more aluminium in future. But the reports give no start date for the new capacity. Until the plant runs, the money spent brings in no sales.
When a company announces a big expansion, three questions help you judge it. How will it be paid for? When will it start earning? Are key inputs like land and power ready? In NALCO's case, the reports cover progress on land and power, but not funding or timing.
The ₹30,000 crore figure is an approved cost, not a final bill. Large projects can cost more or take longer than planned. You can follow similar company plans in our business news section and wider share moves in our markets coverage.
Risks to keep in mind
- Land: work on land, compensation and rehabilitation is still going on. Delays here can slow the project.
- Power: the smelter depends on a power plant that the joint venture has not yet built.
- Cost: if the ₹30,000 crore plan costs more, more money gets tied up.
- Aluminium prices: world prices go up and down. A bigger plant earns more only if prices and costs work out.
- Missing details: the reports give no timeline, funding plan or dividend amount.
What to watch next
Watch for news on land at Anugola, the formal setting up of the joint venture with NLC India, and a project timeline. Also look for company filings on how the project will be paid for, and for confirmed dividend details.
Words explained
- Smelter: A plant where aluminium metal is made from its raw material, using large amounts of electricity.
- Brownfield project: An expansion built on or next to a company's existing operations, instead of on a brand-new site.
- MTPA: Million tonnes per annum. The most a plant can produce in one year.
- Navratna CPSE: A large company mainly owned by the central government that has extra freedom in spending decisions.
- Captive power plant: A power plant that makes electricity mainly for its owner's own factories.
- Joint venture: A new company set up and owned together by two or more firms. Here, NALCO and NLC India own 50% each.
- Interim dividend: A cash share of profit paid to shareholders during the financial year, before the full-year accounts are final.
- Record date: The date on which a company checks its list of shareholders to decide who gets a dividend.
Sources: The Hindu BusinessLine, NDTV Profit.
This article is for information and education only. It is not investment advice. MarketUpDown is not registered with SEBI as an investment adviser or research analyst. Read our disclaimer.