Nalco net dips on low aluminium prices

Nalco, the second biggest aluminium producer in the country, reported a below-expected result for the quarter ended March, 2008. The decline of 10% in net sales during the quarter ended March 2008 is mainly on account of lower aluminium prices and lower alumina sales volume growth. The average sales realisation for aluminium has declined by around 7% as compared to the same quarter last year. Similarly the alumina sales volume has fallen by 15% during the same period.

Even though revenue has declined, the total expenditure has surged by 33%, hitting the bottomline harder. Employee expenses have increased by more than half of what it was for the quarter a year ago. Because the company has made an extra provision for the recent pay commission hike for central government employees and the entire provision for the year was reflected in the fourth quarter.

Similarly the power cost and other expenses have increased by more than 20%. The higher power cost is because of two reasons ������ increase in thermal coal price by 10% and temporary crisis in coal supply forcing the company to import it at a higher price.

Going forward, the company expects the alumina and aluminium prices to be strengthened further in the coming quarters. On Wednesday, Nalco shares ended 2.1% lower on BSE stock fell down by 2.06%, a sharper fall compared to the 0.4% decline in the Sensex.