By Chitra Ramaswamy



AK Sharma, Director (Production) of National Aluminium Company, India’s premier Navartna PSU, who was unanimously elected Chairman of standing committee for non-ferrous minerals and industries at the 43rd Annual General Meeting of the Federation of Indian Minerals Industries. In an exclusive interview to Resource Digests, he speaks about the aluminium giant’s future plans.
Sharma who joined NALCO in its formative years in 1982, brings with him years of professional experience ranging from project conceptualization and construction, to plant operation. He has at all points, steered the company in the direction of achieving capacity output. Proactive and enterprise in his approach to assimilation of technology, Sharma has always ensured the company assimilates foreign state-of-the-art technology, modified to suit Indian conditions and requirements.
NALCO produced 361,262 tonnes of aluminium in the fiscal 2008-09 ending March. The company’s captive thermal-power plant in Angul in Orissa feeds its aluminium smelter plant in Orissa. Excerpts

You were honoured last year, with the prestigious Rajiv Gandhi Rashtriya Ekta Samman for your spectacular contributions to society. As Director (Production) how do you see yourself propelling the company and your activities to greater heights since this honour enhances your responsibilities?

Apart from the issues related to production and productivity, my main thrust has always been the concern and expectations of the people living in our peripheral areas. Rajiv Gandhi Rastriya Ekta Samman has been conferred on me for my work in and around the plant periphery at Angul.

Any Organisation can contribute to society if it generates surplus fund. We at NALCO have the policy to distribute 1 per cent of our Net profit for development of peripheral area. This is exclusive of the amount being spent on other CSR activities by the company. As Director (Production), my focus will be to generate surplus, a part of which can be ploughed back to the community. Today, our focus is to see that the money spent by Nalco is gainfully used for the benefit of the target persons.

What is the secret of NALCO being the lowest cost producer of Alumina?

Captive bauxite mine, world class deposit, low transportation cost through single flight conveyor belt, robust technology and dedicated human resources are the secrets of Nalco being the lowest cost producer of Alumina.

What is the precise objective in setting up a Nuclear Power Plant in Ganjam district of Orissa? Would this be some kind of a foundation for replacing thermal power in the long run?

Setting of a Nuclear plant as a joint venture with NPCIL is a part of Nalco’s strategy to diversify in other business sectors. Further this joint venture will bring in the synergy between capabilities of NPCIL in the field of nuclear energy and Nalco’s efficient operation in thermal power plant. This will be an independent business unit and no way replace the existing thermal power plants even in long run.

Carbon Credits and CDM is the global buzzword today. What are your initiatives in this field?

Four projects of NALCO have been cleared by the nodal agency.

Are you looking to tap alternative and renewable energy sources?

We have plans to go for wind energy firms. The details are being studied. However we are experimenting with one such installation at our Mines.

With whom have you entered into a partnership for the 3.1 lakh tonne Smelter in Iran, and when is it likely to become operational?

Considerable work has been done for the proposed Smelter in Iran. Various alternatives for funding the projects are being explored. MOU has been signed with M/S KDO.

You have signed MoU with the Indonesian government to set up a 5-lakh tonne smelter and 1250MW Captive Power Plant there. Would these be constructed simultaneously? What is the investment on this and when is the plant likely to go operational?

Regarding proposed Smelter and Power Plant in Indonesia, an MOU has been signed with the Indonesian Government Presently the linkages for coal supply and infrastructure facilities such as Port facility and Railway are being examined. Total investment will be approximately USD 3.9billion.

Are you looking to establish more smelters and power plants in Indonesia and Iran in the near future?

We are working to establish the proposed ventures first. Only after completion of these projects the establishment of further units can be examined.

NALCO is also looking to set up plants in Saudi Arabia and South Africa. Has this yielded any positive outcome?

The projects have been dropped.

On the domestic front you plan setting up Power and Smelter complex at Jharsaguda. At what stage is this venture in?

We have already completed the feasibility report for Jharsuguda Project. We are now waiting for the Environmental Impact Assessment carried out by Govt. of Orissa. Based on these reports the clearance will be given by Orissa State Pollution Control Board.

How far is the proposed expansion of smelter capacity in Angul from the present 361,262 to 460,000 on track? Is it likely to reach capacity by December this year?

The commissioning of second phase expansion at Angul will be completed by December 2009. The rated capacity of plant will the be 46,0000 MT.

Why is NALCO not going in for higher current technology in the AP series, like AP 35 instead of using AP 18?

In our New smelters in India or abroad, the high Amperage Technology i.e. 360KA+ will be used. However we are in the process of upgrading our existing lines to 220KA.

To what extent does your captive power plant of 960 MW in Angul meet the smelter requirements? With smelter expansion, would you be expanding power plant capacity as well?

Along with Smelter expansion to 4, 60,000 MT, the Power plant is also being expanded with two additional units of 120 MW each. Presently the capacity of power plant has already been enhanced to 1080 MW and by March 2010 this will be 1200 MW.

How close are you to establishing a cement plant to take care of the fly ash generated by your power plant?

We are in the process of identifying suitable partners to set up cement plants as a joint venture using fly-ash generated from CPP.

To what extent would your acquisition of mining areas at Gudem, KR Konda and other mines in the Godavari area, impact your smelting operations?

NALCO intends to put up an Alumina Refinery in AP at an investment of Rs 7,000 crore, based on above deposits, for which recommendation of GOAP & prior approval of GOI has been received. Detail study is going on.

Following coal crisis a couple of years back, you have built buffer coal stock. Is this going to be the norm henceforth? What about a backward integration in this area?

The coal linkage from MCL meets 80 per cent of our fuel requirement. The balance 20 per cent is being arranged by us through various sources like E-auction, procurement of Washed Coal and Import Coal. This system will continue.

The machinery at Damanjodi has been upgraded to match industry best. But input cost continues to be high, with 21 per cent of the total costs accounting for human resource management. How do you propose to take up this challenge?

As you must be aware, we are the lowest cost producer of Alumina in the country and also one of the lowest in the world. With our 4th stream coming into operation within the same facility the cost of production will further come down. Apart from this we have a system of continuous improvement in process to reduce specific consumptions and increase efficiency. These are yielding good results and are helpful in controlling cost.

How have you been impacted by the global economic scenario in the last one year?

We are not finding any difficulty in selling our products i.e Alumina & Aluminium in domestic and international market. Even with the reduced LME prices we have been making profit may be at lower level. We have taken medium term view of the situation and not resorted to any production cuts. The fact that the LME prices are on the rise since last two months, is a testimony of the correct view-taken by us.

What specific measures did NALCO take to tackle the situation?

We have taken number of initiatives like improving our operating efficiencies, reducing wastes, improving labour productivity by reorganizing the work, optimizing inventories and orienting our employees to the market conditions. These activities taken together have helped us to sail through the turbulent times.

You aim to step up exports from 80,000 tonnes to 120,000 tonnes by year end. Would this be at the cost of domestic demand? Has your export composition undergone change in recent times and what are the future plans in this area?

The realization from sale on exports/domestic market is the criteria for deciding the market strategy.

In respect of the proposed Aluminium Park in Angul for upstream and downstream industries as a joint venture with Orissa Industrial Infrastructure Development, at what stage is it and what will be the initial investment?

MOU has been signed with IDCO. Joint Venture Company will be formed soon. Financial modalities of various investments are being firmed up.

Is there some focused objective to the annual flower show Basant Pushpoa Pradarshani organized by the company at Nalconagar?

NALCO gives lot of importance to environment and as a part of the responsible corporate entity, it organizes state level flower show “Basant Pushpoa Pradarshani” in its Township to increase the awareness & encourage the people for plantation. Various Government and Private organisations and also individuals take active part in this annual show.

You have been accorded Social Accountability System Certificate (SA 8000:2008) by DET NORSKE VERITAS for being committed to provide a socially accountable work environment to all its employees. What precise actions have you taken on this front?

We have taken number of steps as given below.
i) Remediation procedure for child labour
ii) Control Mechanism to monitor the contract workers, so that they are not exploited with respect to Minimum Wage, Working Hour, Safe & healthy work place etc.
iii) Periodic Medical examination of employees
iv) Freedom of association & collective bargain are being encouraged
v) Conducting awareness programmes
vi) Hazard Identification& Risk Assessment(HIRA)

As part of CSR you have undertaken several projects. Can you tell us briefly about your key projects and how they have impacted society?

Company earmarks 1 per cent of its Net profit for the peripheral activities. So far company has already spent more than Rs 100 crores for various projects. The major projects are:
i) Drinking water Schemes
ii) Roads & Bridges construction
iii) Schools( Construction of buildings, boundary walls, equipping with laboratory equipments, library etc)
iv) Rural Sports
v) Mobile Health service
vi) Veterinary Camps
vii) Providing ITI training at Nalco’s cost to Project affected people.

Apart from the various peripheral activities we have also taken up various activities under CSR.
1. Construction of Stadium, Parks, Auditorium etc.
2. Strengthening district Hospitals with more beds, medical equipments
3. Providing facilities to Police such as Mobile Monitoring Vans & Traffic Signaling equipments
4. Extending Relief measures during the calamities.
5. Creation of primary school-cum-cyclone shelters in the coastal districts
6. Renovation & maintenance of Cultural heritage.
7. Encouraging sports activities, Sponsoring important events & employing sports persons etc.
Nalco’s RR policy is one of the best in the country.

What steps have you taken towards achieving the Maharatna status?

Nalco received Navaratna status during April 2008. We are a global reputed competitive company and among the lowest cost producer in Alumina & Aluminium and also have benchmarks in smelting operations. We have succeeded in this global recession and also have Rs 30,000 crore expansion in pipeline. As far as Maharatna status is concerned, we will certainly aspire to be considered by Government of India.