t k chandTapan Kumar Chand has recently taken over as the full-time chairman cum managing director of Navratna PSU, National Aluminium Company Limited (NALCO). Within a short time, he has mastered over the entire operation of this blue-chip company and he forks out figures not even looking at the papers on the table of his sprawling office of the company’s headquarter at Bhubaneswar. True the metal industry is on downslide, but Chand remains upbeat as he talks of the metal major’s plan to invest Rs 36,000 crore in the coming years on various projects that range from expansion of its existing plant to Greenfield to green energy projects. In an interview with Nageshwar Patnaik, Chand attributes the Company’s success to good governance.

Aluminium is already trading at new lows and at prices below cost of production of many Chinese companies. London Metal Exchange (LME) has witnesses a drop of 30% in 3 years (from $2204 to $1660). Is the industry facing a crisis?

T K Chand : Yes, the industry is definitely in a sort of crisis with many high cost smelters having been shut and few more likely to shut in the near future, if situation does not improve. However the fundamentals of the industry remain strong with increased application of the metal owing to its light weight and strength. Crisis situations are also incubators for innovation. The industry’s future is tightly coupled to availability of energy. We foresee innovations in the production process to reduce costs by fostering  energy efficiency improvements and reduction in carbon footprint.

Where does Nalco stand in this scenario?

T K Chand : Well I take it as an opportunity to re-visit our assumptions and test our strengths in related businesses. While our margins are squeezed and smelting operation is curtailed, the scenario offers us an opportunity to get into value added, end use products, where the volatility is low and usually has a lag effect. All along our operations had been focussed on primary metal and Alumina production, now we will shift towards downstream products. This provides us the opportunity to visit our diversification programmes from sector specific like Aero-space to that of mass consumption like packaging, auto, etc. Nalco is bringing innovations for more uses also scalability in production.

Nalco aims to be a reputed global company in the metal and energy sector. It had come out with a vision and corporate plan for 10 years beginning with 2009. Is it on course to achieve targeted growth by 2020?

T K Chand : We had mixed results on the Corporate Plan that has been talked of. Many of the reasons for the misses in achieving the targets are extraneous in nature. We may miss out on the targeted growth, but as a course correction measure, we are planning to revisit our Corporate Plan this year. A flexible plan is envisaged  which takes into account the uncertainties of the future.

What are the company’s diversification and globalization plans?

T K Chand : Though a clear strategic blue print has not yet been redrawn, we intend to diversify in related business in alignment with our core competency. We will shift our resources and attention towards value added products in Aluminium and Alumina. As I have already said presence in Aero-space to that of mass consumption like packaging, auto, etc.

On the globalization front, we intend to set up a Smelter plant in low energy regions. Oman, Iran and Indonesia have been shortlisted as possible destinations and we are engaging with their Governments to take the project forward.
We will be equity investor in Nuclear Power Corporation Power Plant in India once we are clear about  government guidance.

How much investment is in the pipeline from NALCO in setting-up of Greenfield projects in the state in the coming fiscal year and what is the investment in current FY?

T K Chand : The Nalco Board has approved setting up of 5th line of alumina refinery of 1 MTPA capacity based on Pottangi Bauxite deposit. Final allotment of Pottangi mines is pending with the State Government. Once the mine is allotted, the same will attract a capital outlay of Rs. 1437 crores over next 3-4 years for developing the mine and for setting up necessary bauxite transportation facilities. However, the total outlay for the Refinery project is Rs.5540 crore.

How the company is going about investing in the Green energy sector in the country in general and in Odisha in particular?

T K Chand : At present, NALCO has plans to invest in the following Green energy projects.

a. 100 MW wind power project at any suitable location(s) in India at an estimated investment of Rs 660 crore.
b. 14 MW wind power project at mined out area of its bauxite mines in Koraput at an estimated investment of Rs 82 crore.
c. 20 MW ground mounted solar power plant at any suitable location in India at an estimated investment of Rs 140 crore.
d. 40 kWp rooftop solar project at NALCO Research and Technology Centre (NRTC), Bhubaneswar at an investment of Rs 25 lakhs.
e. We are committed to Rs. 100- 200 crores for setting up Alumina Park at Anugul.
f. Our investment target in Orissa is around Rs. 25000 crores to Rs. 27000 crores.
g. In Sundargarh we plan to come up with a 5 lakh tonnes aluminium which will cost us around Rs. 19000 crores.
h. We are looking at allotment of coal and mineral blocks and government policy to carry this out.

Exploring new mineral reserves for import substitution is the latest recommendation from mineral scientists. Is Nalco exploring this aspect?

T K Chand : Nalco is not into mineral exploration as such, though it has kept its options open. The company is primarily into mining of Bauxite for captive consumption in the production process of Alumina and Aluminium.

The Supreme Court has made the consent of local community mandatory for conducting mining operations. Will it affect the industrialization process in the country and the state? What will be its impact on Nalco’s production activities?

T K Chand : We consider such consent essential that involves the prospective stakeholders. It is a well-known fact that Mining as an economic activity has always been considered a polluting industry with very little benefit accruing to the local community from these activities. If seen in isolation, such consent clauses may have some retrograde effect on industrialization. But if seen in a larger context of inclusive growth, such clauses are welcome.

We do not see such mandatory consent clauses having any adverse impact on our operations. We, as responsible corporate citizens ensure to take along the local community in our growth endeavours. We establish clear communications lines to facilitate informed decision making by local communities on such matters.

Green activists say Nalco’s Smelter and Captive Power plant at Angul polluting the air and water in the region. What is the ground situation?

T K Chand: This allegation is not based on facts as established by independent investigating agencies like State Pollution Control Board and agencies hired by them. Nalco spends around Rs. 200 crores a year in maintaining clean environment friendly production. We have installed electro-magnetic precipitations. 21 km green slurry pipeline to deposit fly ash in mine void is in the process. We also have procedures to ensure prevention of pollution from our operations. However we remain open to suggestion for further  improvements wherever found feasible.

The future of the aluminium industry is intrinsically related to the issue of global warming and emission of greenhouse gases. What is the Company’s plan to reduce the emission of greenhouse gases?

T K Chand : Aluminium making being an energy-intensive industry, the question of emission of greenhouse gases stems from the source of energy. Any Smelter plant with a Captive Hydel power sources would have smaller carbon footprint than a Smelter with Thermal Captive power plant. Thermal power plants are polluting by nature and all the Aluminium producers in the country rely on thermal power generation to meet the energy needs of the industry.

The only way to contain or reduce emission is by adoption of efficiency improvement programs to reduce specific consumption of carbon in power generation and aluminium smelting. Nalco has also adopted such programs. As per PAT (Perform, Achieve, Trade) initiative to improve energy efficiency in operation, we have taken various steps like introduction of slotted anode in potline, implementation of ALPSYS system for pot regulation, efficient burner management system in furnaces of smelter for proper combustion and optimisation of operational parameters to reduce energy consumption there by reducing greenhouse gas.

In addition, Nalco has implemented Carbon sequestration project, first of its kind in country, in its captive power plant to produce/grow algae by using flue gas generated from the boilers which will reduce greenhouse emission. Due to above energy conservation majors BEE (Bureau of Energy Efficiency) has recommended Nalco for 38,000 energy saving certificates.

We have ethics committee too. Our transparent governance with value system is conscious about  oraganisation responsibility towards environment.

Corporate Governance and Corporate Social Responsibility [CSR] are crucial to any Company’s Brand Image. How do you plan to enhance the Navaratna Company’s brand equity?

T K Chand : Nalco has always tried to enhance its brand image and brand equity, not only at the national level but also at the global market. Registered with London Metal Exchange, our products enjoy worldwide reputation on account of their quality, reliability and high standard of customer service. This has already given a global competitive edge to Brand Nalco. With a view to further enhance this reputation and brand equity of the company, we are not only focusing to increase our productivity and profitability, but also trying to redefine and showcase our credibility.

Corporate Governance is an institutional framework with proper checks and balances to undertake, coordinate and oversee the interests of all stakeholders. NALCO as a responsible corporate citizen, believes in this philosophy and follows it in letter and spirit and giving due importance to this aspect at all levels, in all our activities.

I feel, Good Governance is the key to success of any organization. Similarly, although so far we have crossed many milestones in the field of CSR, now we are taking it to next level and focusing on empathetic CSR to ensure inclusive growth, which in turn would add to our credentials.