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Alumina production for the quarter was 398kt (+13% qoq) while aluminium metal production
was 111kt (+1% qoq and flat yoy).
Alumina sales was 164kt (-27% qoq and -15% yoy) while aluminium sales was 104kt (-4%
qoq and -12% yoy). Average realization of alumina was US$356/tonne while for aluminium, it
was US$2,390/tonne, a premium of US$50 over average LME price. The sequential decline in
volumes and the lag in pricing, we believe, explains the flattish top-line despite strength in
LME prices.
The 11% sequential decline in power and fuel costs was expected due to resumption of coal
supplies from Coal India and less dependence on imports/e-auction. For the quarter, 85% of
its coal requirements was met through linkages with the rest through e-auction/imports. This
led to cost of power generation declining to Rs2.1/unit.
Alumina refinery expansion to 2.1mt has been further delayed and is now expected to be
commissioned by April 2011.
Capital expenditure budget for FY11 has been revised downwards to Rs9.8bn due to delay in
expansion of alumina refinery. Capex for FY12 has been guided for Rs12bn.
The land acquisition and statutory clearances have been obtained for Utkal E-block coal and
rehabilitation and resettlement processes are on. Mining is expected to commence by FY14.
The block has 30mt of reserves and production is expected to be 2mt/pa. We note that the
level of ash content is high and the open cast mine is at a distance of 60km from the plant. At
an estimated project cost of Rs4bn, the cost of production estimated by management
currently is in the range of Rs1300-1400/tonne. This compares with Rs850/tonne for coal got
through linkage.
Management confirmed news reports that the company is in discussions with Hindustan
Copper to invest in their mine, though nothing has been finalized yet.
We have a Hold on National Aluminium with a target price of Rs365
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
Alumina production for the quarter was 398kt (+13% qoq) while aluminium metal production
was 111kt (+1% qoq and flat yoy).
Alumina sales was 164kt (-27% qoq and -15% yoy) while aluminium sales was 104kt (-4%
qoq and -12% yoy). Average realization of alumina was US$356/tonne while for aluminium, it
was US$2,390/tonne, a premium of US$50 over average LME price. The sequential decline in
volumes and the lag in pricing, we believe, explains the flattish top-line despite strength in
LME prices.
The 11% sequential decline in power and fuel costs was expected due to resumption of coal
supplies from Coal India and less dependence on imports/e-auction. For the quarter, 85% of
its coal requirements was met through linkages with the rest through e-auction/imports. This
led to cost of power generation declining to Rs2.1/unit.
Alumina refinery expansion to 2.1mt has been further delayed and is now expected to be
commissioned by April 2011.
Capital expenditure budget for FY11 has been revised downwards to Rs9.8bn due to delay in
expansion of alumina refinery. Capex for FY12 has been guided for Rs12bn.
The land acquisition and statutory clearances have been obtained for Utkal E-block coal and
rehabilitation and resettlement processes are on. Mining is expected to commence by FY14.
The block has 30mt of reserves and production is expected to be 2mt/pa. We note that the
level of ash content is high and the open cast mine is at a distance of 60km from the plant. At
an estimated project cost of Rs4bn, the cost of production estimated by management
currently is in the range of Rs1300-1400/tonne. This compares with Rs850/tonne for coal got
through linkage.
Management confirmed news reports that the company is in discussions with Hindustan
Copper to invest in their mine, though nothing has been finalized yet.
We have a Hold on National Aluminium with a target price of Rs365
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