a project report on inventory management of...
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SUBMITTED BY: NILAMADHAB DAS | ROLL NO: 11MBAS21540
A
PROJECT REPORT
ON
INVENTORY MANAGEMENT OFNALCO
By
A REPORT SUBMITTED IN PARTIAL FULFILLMENT OF THE REQUIREMENTOF MBA PROGRAM
In Guidance With
MANIK CHAND GHOSHINTERNAL GUIDE, TALCHER
Submitted By:
NILAMADHAB DAS
Roll No. : 11MBAS21540
DDCE, SAMBALPUR UNIVERSITY
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DECLARATION
I hereby declare that this project report submitted by me to DDCE,
Sambalpur University Course in partial fulfillment for the award of
Degree of ‘Master of Business Administration’ is of my own and data
collected during the training shall be kept confidential and used only for
academic purposes.
Nilamadhab Das
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CERTIFICATE
The project report of Nilamadhab Das “Inventory Management of
NALCO” is approved and is acceptable in quality and form. The
candidate has not submitted this report either fully or partially any
where else for publication. I recommended the thesis for the
submission to DDCE, Sambalpur University for evaluation as partial
fulfillment of Project Report of MBA.
The results and reports were found satisfactory
Mr. R.C.Joshi, (Manager Finance)
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EXAMINER’S CERTIFICATE
This project report is submitted by Nilamadhab Das of MBA bearing the
Roll No. 11MBAS21540 under DDCE, Sambalpur University and
forwarded for evaluation.
Internal Examiner External Examiner
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CERTIFICATE OF APPROVAL
This is to Certify that the Project Entitled:
“Inventory Management of NALCO”
Submitted by Nilamadhab Das (Roll No. 11MBAS21540), Sambalpur University,
Burla towards partial fulfillment of the requirements for the award of the degree of
Master of Business Administration (MBA) is a bona fide record of the work carried
out by him under the able guidance of Manik Chand Ghosh, Faculty, RD Computer
& Management, Talcher.
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ACKNOWLEDGEMENT
The satisfaction and euphoria that accompanies the successful completion of any task
would be incomplete without the mention of the people whose consent, guidance,
support and encouragement crown all efforts with success.
I sincerely thank Mr. Asutosh Rath, MANAGER (TQM) for giving me an opportunity
to undergo the summer training at National Aluminium Company Ltd., Damanjodi.
I would like to sincerely express my deep sense of gratitude to Mr. R.C.Joshi,
MANAGER (Finance), Mr. Satyabrata Dash Dy. MANAGER (Finance) and the staff
in the Finance Department of NALCO for their valuable guidance in pursuing my
project.
I am very much obliged to Mr. U.C. Sahu, D.G.M., Mr. R.C.Dash, MANAGER, Mr.
V.H.N Murty Sr.E.A, H.R.D of NALCO, Mrs.Krishna Kumari, Sr. MANAGER
(Chemical) for providing me with the necessary information required for my project
report.
I sincerely thank my guide Manik Chand Ghosh, Faculty, NICE TALCHER for his
guidance in pursuing my project successfully.
Nilamadhab Das
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CONTENTS
1. Introduction
2. Inventory Management
3. A Study On Financial Of Nalco
4. Ratio Analysis
5. Funds Flow & Cash Flow Statement
6. Refinery Process Overview
7. Conclusion/Summary & Suggestions
8. Annexure
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CHAPTER – I
INTRODUCTION
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COMPANY PROFILE
The back ground of the company :
Following the discovery of large reserves of bauxite ore in the east coast and
the preliminary project work done by Bharat Aluminum company limited, the
company was set by the govt. India in1981 to implement one of the largest multi-
locational integrated Aluminum projects of the world with its own captive power plant
and port facilities.
The technical collaboration of aluminum Pechiney of France, The support of
Euro Dollar loan from a consortium of international banks and the special
dispensation of the govt. of India and the govt. of Orissa helped the company to
implement the project expeditiously within the budgeted cost of Rs 2408 crore, under
very difficult logistics of project management.
Different segments of the company went into production in a phased manner
starting from November, 1985.Within a short span of time, the company has emerged
as a leader in the field of aluminum production in the country and also has made
significant impact abroad .The company has helped the company to make quantum
jump in production of aluminum and has also been earning substantial foreign
exchange through creditable export performance year after year.
ABOUT THE MANAGEMENT:
The company is a Government of India enterprise under the administrative
control of the Ministry of Mines. The company is managed by a Board of Directors
appointed by the president of India. The Board consists of 10 directors including the
CMD of the company. Apart from the CMS, there are 4 functional or full time
directors heading production, Finance, Projects & Technical, Personnel,
administration discipline. There are 2 senior officials of Govt. of India. Besides, there
are non-official Directors in the board. Subject to the provisions of the Indian
Companies Act, the memorandum and Articles of Association, MOU signed with the
Govt. of India and also subject to policies formulated by the Board of Directors, from
time to time, the CMD has full power to sanction expenditures or to deal with other
matters for effective functioning of the company.
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The Management’s control system is based on delegation of authority and
individual accountability for results. The responsibility and authority to take decisions
on various matters are delegated by the CMD to different levels in the management.
THE VISION:
To be a company of global repute in Aluminium.
THE MISSION:
To achieve growth in business with global competitive edge providing
satisfaction to the customers, employees, share holders and community at large.
CORPARATE OBJECTIVES:
- To maximize capacity utilization.
- To optimize operational efficiency and productivity.
- To maintain highest international standards of excellence in product
quality, cost efficiency and customer service.
- To provide a steady growth in business by technology up gradation,
expansion and diversification.
- To have global presence and earn Foreign Exchange.
- To maintain leadership in domestic market.
- To instill financial discipline at all levels for achieving cost and
budgetary controls, optimize utilization of working capital and
effective cash flow management.
- To maximize return on investment.
- To develop a strong R & D base and increase business development
activities.
- To promote result oriented organizational methods and work culture
that empowers employees and helps realization of individual and
organizational goals.
- To maximize internal customer satisfaction.
- To faster high standards of health, safety and environment friendly
products.
- To participate in peripheral development of the area.
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THE PROJECT FINANCE:
NALCO was started with a capital cost of Rs.2,408 Crores, out of which 1,119
Crores equivalent of Euro Dollar was financed by Consortium of International Banks
and balance Rs.1,289 Crores was financed through Equity from Government of India.
UNIT-WISE CAPITAL COST
I. Bauxite Mines 88 Crores.
II. Aluminium Refinery 754 Crores.
III. Port Facilities 31 Crores.
IV. Smelter Plant 723 Crores.
V. Captive Power Plant 812 Crores.
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NALCO TODAY:
National Aluminum Company Limited (NALCO) is considered to be a turning
point in the 50 years old history of Indian Aluminum Industry. In a major leap
forward, NALCO has not only addressed itself to the country’s need for self-
sufficiency in aluminum, but has also given the country the technology edge in
making this strategic metal on the best of the world standards.
Today, NALCO has emerged as the largest Integrated Bauxite-Aluminium-
Aluminium complex in Asia, enabling India to witness a quantum jump in alumina
and aluminum production. NALCO for the first time created exportable surplus in
alumina and helped India to focus on its massive Bauxite resources in the East Coast
estimated at 1600 million tonnes.
The integrated complex has fine segments i.e., Bauxite Mines, Alumina
Refinery, Alumina plant, captive power plant and port facilities.
The Open Cast Mines was located at Panchpatmali Hills of Koraput District in
Orissa, whereas the Alumina Refinery was located at Damanjodi, a flat land located
about 15 kms away from the Mines. Together, the unit came up to be the largest open
cast bauxite mine and the largest alumina plant in Asia.
Bauxite Mine
The fully mechanized
opencast mine of 4.8 million
tpa capacity is in operation
since November, 1985,
serving feedstock to Alumina
Refinery at Damanjodi
located on the foothills..
The salient features:
Area of deposit - 16 sq. km.
Resource - 310 million tonnes
Ore quality - Alumina 45%, Silica 2%
Mineralogy - Over 90% gibbsitic
Over burden - 3 meters (average)
Ore thickness - 14 meters (average)
Transport - 14.6 km long single flight multicurve cable belt conveyor of 1800
tph
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The Performance of the Mines has been exemplary. The last ten years production
shown below:
Mines and the Environment
The Panchpatmali Bauxite
Mines of NALCO has been well-
known as one of the most
Environment friendly mine today.
Salient Environmental features:
Periphery barrier of 15m
width having green cover
around mines
Garland drains and drainage control within the mines
Dust suppression at source and sprinkling of water
Total overburden excavated with top soil used for reclamation and
rehabilitation of mined out areas with vegetation cover.
Studies Conducted on environment:
Studies on effect of blasting on ground water table at Bauxite Mines
Studies on water quality and water flow to assess the impact of mining on the
perennial springs below.
Eco-genetic resources survey at Panchpatmali Mines.
The Environment Management Systems of Bauxite Mines certified to ISO-14001
standards on June 24, 1996, by M/s Aspects Moody Certification, UK.
Alumina Refinery Complex
The 15, 75,000
tpa Alumina Refinery,
having three parallel
streams of equal capacity,
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is located in the picturesque valley of Damanjodi in Koraput district is in operation
since Sep 1986.
The Refinery is designed to:
Provide about 6,90,000 tons of Alumina to the Company's Smelter at Angul
Export the balance Alumina to overseas markets through Visakhapatnam Port
The salient features:
Atmospheric pressure digestion process
Pre-desilication and inter-stage cooling for higher productivity
Energy efficient fluidized bed calciners
Co-generation of 3x18.5 MW power by use of back pressure turbine in steam
generation plant
Advanced red mud disposal system
Alumina Refinery has been consistently improving its performance from its
inception and has proven to be one of the best in the business today, with consistently
exceeding its capacity for the last three years, apart from producing Alumina at the
world’s lowest cost today. The
production trend over the last ten years
is shown below:
The Alumina Refinery has been
earning hundreds of million dollars of
valuable foreign exchange for the
country through these years through
export of its product, which
consistently meets and exceeds the
Quality requirement of the international market. Alumina from Nalco’s Damanjodi
Refinery is globally sought after.
Environment and the Alumina Refinery
The Alumina Refinery has been both designed to be and later upgraded to be
environment friendly in all respects.
Salient environmental features
Highly efficient ESPs at Calciners and steam Generation Plant
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Multistage washing of red mud and its storage in specially designed pond
Use of dust collectors at handling and transport areas of bauxite, coal, lime
and alumina
Recycling of waste water
The Environment Management Systems of Refinery certified to ISO-14001
standards on February 10, 1997, by M/s Aspects Moody Certification, UK
Modernization/De-bottlenecking/Expansion of M&R Complex
The massive modernization/ de-bottlenecking & expansion program of M&R
Complex has been completed.
The methodology followed for the exercise was as follows:
The constraints in production, quality and cost of production were studied in detail
in-house as well by process licensors. This was followed up with identifying solutions
for each constraint and choosing the most modern and economical techniques to
achieve the objectives. Implementation of these techniques and installation/
commissioning of the new equipment on the earlier two streams rated at 800,000
MTPY enhanced the capacity to 10, 50,000 MTPY.
Further, a de-bottlenecked and modernized stream of Alumina Plant was installed
in the expansion stage, which raised the Plant Capacity to a staggering 15,75,000
MTPY.
The Changes being incorporated is primarily as follows:
Increase in speed of Cable belt to double that of the existing speed
Pre-desilication of Bauxite, before digestion
Double stage dilution, with second dilution after settling
High concentration post-desilication and settling.
Individual Kelly feed and lime dosing
Improved Heat exchangers for better exchange rate with lower surface area
Inter-stage cooling of precipitators
Cyclone Classification and Spent-liquor solids separation
Six-stage evaporation
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Utilizing conveying air in Calcinations for combustion
Aluminium Smelter
The 3, 45,000 tpa capacity Aluminium Smelter is
located at Angul in Orissa. Based on energy efficient state-
of-the-art technology of smelting and pollution control, the
Smelter Plant is in operation since early 1987.
Presently, the capacity is being expanded to 4,
60,000 tpa.
The salient features:
Advanced 180 KA cell technology
Micro-processor based pot regulation system
Fume treatment plant with dry-scrubbing system for pollution control and fluoridesalt recovery
Integrated facility for manufacturing carbon anodes, bus bars, anode stems etc.
4 x 35 tone and 4 x 45 tone furnaces and 2 x 15 tph and 2 x 20 tph ingot castingmachines
4 x 45 tonne furnaces and 2 x 9.5 tph wire rod mills
2 x 45 tonne furnaces and 60/42 per drop billet casting machine
2 x 1.5 tonne induction furnace with a 4 tph alloy ingot casting machine
26,000 tpa strip casting machines
With the acquisition and subsequent merger of International Aluminium ProductsLimited (IAPL) with Nalco, the 50,000 tpa export-oriented Rolled Products Unit is allset to produce foil stock, fin stock, can stock, circles, coil stock, cable wraps, standardsheets and coils.
Captive Power Plant
Close to the Aluminium Smelter at Angul, a Captive Power Plant of 960 MW
capacity, comprising 8 x 120 MW clusters, has been established for firm supply of
power to the Smelter.
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Presently, the capacity is being expanded to 1200 MW.
The salient features:
Micro-processor based burner management system for optimum thermal
efficiency
Computer controlled data acquisition system for on-line monitoring
Automatic turbine run-up system
Specially designed barrel type high pressure turbine
Electrostatic precipitators with advanced intelligent controllers
Wet disposal of ash
The water for the Plant is drawn from River Brahmani through a 7 km long double
circuit pipeline. The coal demand is met from a mine of 3.5 million tpa capacity
opened up for Nalco at Bharatpur in Talcher by Mahanadi Coalfields Limited. The
Power Plant is inter-connected with the State Grid.
Port Facilities
On the Northern Arm of the Inner Harbor of Visakhapatnam Port on the Bay of
Bengal, Nalco has established mechanized storage and ship handling facilities for
exporting Alumina in bulk and importing Caustic Soda.
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The salient features:
Maximum ship size - 35000 DWT
Alumina reception - 48 x 53 tonne pay-load wagons
Alumina storage - 3 x 25000 ton RCC Silos
Ship loading rate - 2200 tph
These facilities are being upgraded to handle higher volumes of exports,
following expansion of production capacities.
PRODUCTS:
I. Alumina:
Calcined Alumina – Metallurgical Grade.
Hydrated Alumina.
Special Alumina.
II. Aluminium Metal :
Electrical Conductor Grade.
Commercial Grade.
High Purity Grade.
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Alloy Grade.
In the forms of 20 Kg. Ingots / 650 Kg. sows and 9.5 mm and 7.5 mm dia wire
rods. Alloys available in the form of 10 Kg. Ingots and Billets in 125 to 200 mm dia
(4 sizes).
The quality assurance associated with NALCO products received international
acclaim with Nalco’s admission to London Metal Exchange (LME) in 1989.
POLLUTION CONTROL AND ENVIRONMENT :
NALCO has an excellent track record in environment management. All the
units of the company are meeting the statutory norms and conditions of pollution
control. The environment management system of the M & R complex at Damanjodi
has been audited and recommended by Aspects Certification Services, U.K for
accredition under BS 7750/ISO 14001. Efforts in the similar direction are an in the
company’s smaller & power plant at Angul which will put the company at part with
the select few in the world of Industry.
QUALITY MOVEMENT :
The company has accredited the ISO 9002 for smelter plant at Angul, Captive
Power Plant at Angul, Alumina Refinery at Damanjodi and Bauxite Mines at
Panchpatmalli. With this the company has earned the unique distinction of having the
quality management system of all the production units ISO certified.
ISO 9002 Certification:
a) Alumina Refinery - Nov, 1994
b) Smelter Plant - Feb, 1995
c) Bauxite Mines - Jan, 1996
d) Captive Power Plant - Feb, 1996
The Company also got accredited to BS 7750 and ISO 14001 Certification for
Environment Management System of Mines and Refinery in 1996.
Quality circles are encouraged and motivated to participate in the competitions
organized at various levels.
MOU RATING:
NALCO being a public sector signs a memorandum of understanding with the
Government of India. NALCO is rated “Excellent” in the evaluation of MOU signed
with the Government for 3 consecutive years.
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EXPANSION PROGRAMMES :EXPANSION OF MINES AND REFINERY COMPLEX
Government of India had approved the proposal for expansion of the Bauxite Mines
and Alumina Refinery in 1996. The salient features of the expansion are:
Bauxite Mines Alumina Refinery
Capacity
Existing
After expansion
24,00,000 TPY
48,00,000 TPY
8,00,000 TPY
15,75,000 TPY
Project cost Rs.120.59 Crores Rs.1331.11 Crores
The expansion of Alumina Refinery had been completed in two phases i.e.,
Debottlenecking (from 8 Lakhs TPY to 10.50 Lakhs TPY) and Third Stream (from 10.50
Lakhs TPY to 15.75 Lakhs TPY). The third Stream will be a replica of one of the
debottlenecked streams.
Reputed consultants have been appointed for carrying out Detailed Engineering,
Tendering and Procurement Services and Construction Management for the various project
segments. The names of the consultants and their area of work are as follows:
Project Segment ConsultantMines and Refinery. M/s Engineers India Ltd., New Delhi.Steam Generation Plant, Township,
Railway Facility, Port Facilities at Vizag.
M/s MECON, Ranchi
The atmospheric pressure digestion technology of AP used in the existing plant is
being adopted for the Expansion. Some improvements developed by AP have been
incorporated in the existing processes.
EXPANSION OF SMELTER AND POWER COMPLEX
Government of India approved expansion of Aluminium and CPP at Angul during
February, 1998. The salient features of the expansion are:
SMELTER CPPCapacity
Existing 2,30,000 TPY 6 *120 MW
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After expansion 3,45,000 TPY 7 *120 MWProject Cost Rs.1641.98 Crores Rs.420 Crores
Reputed consultants have been appointed for carrying out Detailed Engineering,
Tendering and Procurement Services and Construction Management for the various project
segments. The names of the consultants and their area of work are as follows:
PROJECT SEGMENT CONSULTANTSmelter
Captive Power Plant
Township
Railway Facility
M/s Engineers India Ltd., New Delhi.
M/s MN Dastur and Co., Chennai.
M/s NIDC, New Delhi.
M/s MECON, Ranchi.NEW PROJECTS AND EXPANSION ACTIVITIES:
As part of its business developments strategies NALCO has undertaken a number of new
projects. These projects will broaden product mix of the company and provide value addition.
NALCO has chalked out a two phase expansion plan at a total cost of Rs.3727
Crores. It has already got the approval of Government of India and work has been started
Besides management was pro-active in initiating other projects to enrich its product
profile. The projects which are expected to be completed are as detailed below:
PROJECT CAPACITY
(TPA)
LOCATION COST
(RS. IN CRORES)Strip Casting 26,000 Angul 49.86SGA 20,000 Damanjodi 45.72Zeolite ‘A’ 9,000 Damanjodi 24.10Gallium 01 Damanjodi 9.46
The on going projects at Damanjodi which are scheduled for completion in the first
quarter of 1998 are being managed nicely without the cost overrun and time overrun. The
special projects are specially looked after by GM (projects), with direct assistance from DGM
(projects), CM (projects) and some middle level managers.
As NALCO enters the 25th year of its existence in 2005 ,a national asset worth above Rs
10,000 Crore gets created out of an initial investment of Rs 2408 Crore, while yielding reach
dividends for the country ,for the state and for the people at large.
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NEED FOR THE STUDY:
In this context there is a need to study the efficiency with which NALCO is contributing
its part towards the economic development. For this purpose the study of major financial
activities does a long way in understanding the efficiency of NALCO.
OBJECTIVES OF THE STUDY:
The main objectives of the study are:
To study the firm’s financial position, past performance and assess its present
financial strength.
To study the theory and practice of Financial Management.
To analyze the financial ratios and Funds flow and Cash flow statement.
To get an insight into various sources available for financing working capital
and its utilization.
To study the firm’s social responsibility through value added statement.
To summarize and suggest wherever necessary.
METHODOLOGY FOR THE STUDY:
The data for the present study is drawn both from primary and secondary sources.
The primary data is collected from discussion with the executives of NALCO and a few
employees.
The Secondary data is collected from the corporations annual reports, magazines like
‘parichay’ and guide like ‘The Company you keep’. Interpretation of various statistics has
been done through analysis wherever necessary. The statistics for a period of 2 years only has
been taken for easy calculation.
EXPECTED CONTRIBUTION FROM THE STUDY:
To provide a handy reference in understanding the Nalco’s financial policies
and procedures.
To provide an insight into various sources available for financing working
capital and its utilization.
To provide an idea of optimum utilization of all material resources through a
well designed budgetary control system.
To provide economic information to the investors and to judge the
management on its stewardship of the resources of the enterprises and
achievement of corporate objectives.
To provide information about the economic activity of NALCO in particular
to several group who otherwise has no access to such information.
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To provide an idea of achieving optimum utilization of capacity with lowest
possible cost through cost reduction and cost control techniques.
To provide the sources for raising funds for the new projects.
To provide value for money to all stake holders.
To comply the various statutory requirements in a manner prescribed under
the statue.
TOOLS & TECHNIQUES TO BE USED:
Ratio Analysis.
Fund Flow Statement.
Cash Flow Statement.
Trend Analysis.
Sensitivity Analysis.
Graphs, Charts.
LIMITATIONS:
Any project is not free from limitations. Here also there may be several limitations to
the study. But the main limitations for this study are:
The study is limited to 4 years i.e., 2007-08 to 2010-11.
The data used in this study have been taken from published annual reports only, hence
grouping or sub-grouping and annualisation of data may slightly affect the result. It is not
possible to collect primary data from the company’s office.
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CHAPTER-FRAME WORK:
The entire project report is framed into NINE chapters. The details of which are
given below:
1) INTRODUCTION:
The back ground of the company, About the Management, Vision, Mission, Corporate
Objectives, Project Finance, NALCO Today, Products, Pollution Control and
Environment, Quality Movement, Expansion Programmes, New Projects and Expansion
Activities, Need for the Study, Objectives of the Study, Methodology for the Study,
Contribution from the Study, Tools & Techniques to be Used, Limitations, Chapter-
Frame Work.
2) TECHNOLOGY:
Introduction, Specific Areas in which R & D Activities carries out by NALCO, Benefits,
Technology Absorption, Adaptation and Innovation by NALCO, Technology imported
last five years, Rolled Products Unit.
3) A STUDY OF FINANCIAL MANAGEMENT OF NALCO:
Introduction, Finance Function, Financial Goal, Functions of Financial
Management, Financial Position of NALCO, Financial Management of NALCO,
Graphs.
4) EVERY DAY FUNCTION :
Cash Management in NALCO, Tenders and Contracts, Division of Work, Internal Audit
Section, Internal Audit Technique, Bill Section, Payment Mode, Establishment Section,
Raw Materials Section.
5) INVENTORY MANAGEMENT:
Introduction, Nature, Needs, Objectives, Accounting Policies, Inventory Management in
NALCO, Control System, Stock Levels, Tools & Techniques, Advantages, EOQ,
Method of Valuation, Conclusion, Inventory Levels.
6) RATIO ANALYSIS:
Introduction, Significance, Financial Ratios, Analysis, Conclusion.
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7) FUNDS FLOW AND CASH FLOW STATEMENTS:
Introduction, Comparison between, Importances, The terms used in the Cash flow
analysis of NALCO.
8) REFINERY PROCESS OVERVIEW:
Introduction, Basic Technology, Product Quality, List of Raw Materials, Bauxite
Handling Area, Grinding, Pre-Desilication, Digestion, Sand Separation & Washing,
Dilution, Post Desilication, Settling, Mud Washing, Flocculation & Causticisation,
Security Filtration, Calcinations.
9) CONCLUSION / SUMMARY & SUGGESTIONS :
Summary and Suggestion basing upon the whole study.
Bibliography.
10) ANNEXURE
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CHAPTER – II
INVENTORY MANAGEMENT
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INVENTORY MANAGEMENT
INTRODUCTIONInventories constitute the most significant part of current assets of a large majority of
companies in India. On an average inventories are approximately 60% of current assets inpublic limited companies in India. Because of the large size of inventories maintained byfirms, a considerable amount is required to be committed to them. It is, therefore, absolutelyimperative to mange inventories efficiently and effectively in order to avoid unnecessaryinvestment. A firm neglecting its inventories will be jeopardizing its long-run profitability andmay fail ultimately. It is possible for a company to reduce its levels of inventoriesconsiderably, without any adverse effect on production and sales, by using simple inventoryplanning and control techniques. The reduction in ‘excessive’ inventories caries a favorableimpact on a company’s profitability.NATURE OF INVENTORIES
Inventories are the stock of the product a company is manufacturing for sale andcomponents that make up the product. The various forms in which inventories exist in amanufacturing company are:
Raw Materials are those basic inputs that are converted into finished productthrough the manufacturing process. Raw materials inventories are those unitswhich have been purchased and stored for future productions.
Work-in-process inventories are semi-manufactured products. They representproducts that need more work before they become finished products for sale.
Finished goods inventories are those completely manufactured productswhich are ready for sale. Stocks of raw materials and work-in-processfacilitate production. While stock of finished goods is required for smoothmarketing operations. Thus, inventories serve as a link between theproduction and consumption of goods.
The levels of three kinds of inventories for a firm depend on the nature of itsbusiness. A manufacturing firm will have substantially high levels of all three kinds ofinventories, while a retail or wholesale firm will have a high level of finished goodsinventories and no raw material and work-in-process inventories.
Besides the above-mentioned three kinds, a fourth kind of inventory, supplies (orstores and spares) are also maintained by firms. Supplies include office and plant cleaningmaterials such as soap, brooms, fuel lubricants, light bulb etc. These materials do not directlyenter in the production process, but are very much essential for smooth running of theproduction process. Usually, these supplies constitute a very small part of the total inventoryand do not involve any significant investment.NEED TO HOLD INVENTORIESThere are three general motives for holding inventories.
Transactions motive emphasizes the need to maintain inventories to facilitatesmooth production and sales operations.
Precautionary motive necessitates holding of inventories to guard against therisk of unpredictable changes in demand and supply forces and other factors.
Speculative motive influences the decision to increase or reduce inventorylevels to take advantage of price fluctuations.
OBJECTIVES OF INVENTORY MANAGEMENTThe main objectives of inventory management are operational and financial. The
operational objectives mean that the materials and spares should be available in sufficientquantity so that work is not disrupted for want of inventory. The financial objective means
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that investment in inventories should not remain idle and minimum working capital should belocked in it. The following are the objectives of inventory management:
a) To ensure continuous supply of materials, spares and finished goods.b) To avoid both over-stocking and under-stocking of inventory.c) To maintain investments in inventories at the optimum level as required by
operational and sales activities.d) To keep material cost under control so that they contribute in reducing costs
of production and overall costs.e) To eliminate duplication in ordering. This is possible with centralizing of
purchases.f) To minimize losses through deterioration, pilferage, wastage and damages.g) To design proper organization for inventory management.h) To ensure perpetual inventory control so that material lying in stock ledgers
should be actually lying in stores.i) To ensure right quality goods at reasonable prices.j) To facilitate furnishing of data for short-term and long-term planning and
control of inventory.INVENTORY ACCOUNTING POLICIES IN NALCO:
Raw materials, Stores, Spares parts and tools are valued at weighted averagecost and net of CENVAT credit wherever applicable.
Finished goods are valued at lower of cost or net realizable value. Cost isdetermined on the basis of current year’s average cost of production andexcludes selling and distribution overheads, interest, exchange variation anddepreciation on capitalized exchange variation. Cost of Finished goods insidethe plant includes excise duty payable.
Intermediary product, viz. Anodes are valued at cost. Anode butts and anoderejects are valued at lower of realizable value or 45% of direct material cost(being 50% of direct material cost less 10% thereof towards reprocessingcost).
Aluminium scrap is valued at lower of cost or net realizable value. Scraparising out of replacement of major machinery components is valued on thebasis of technical estimation. Other scrap and bath tapped from pot shells areaccounted for on disposal.
Stock of work-in-process is ascertained on the basis of technical estimatesand is valued at lower of annual average direct material, power & fuel andproportionate conversion cost or net realisable value.
Inventory of stores and spares, other than insurance spares, not moved formore than 5 years is valued at 5% of cost.
INVENTORY MANAGEMENT IN NALCO :NALCO is a large scale manufacturing company involved in mining of bauxite and
production of Alumina and Aluminium. Therefore it has to maintain large quantities ofinventories at production units, for its smooth running and functioning.
The company has set a record by mining of 48, 16,762 MT Bauxite and producing 15,50,100 MT of Alumina and a combined sales of 2, 96,368 MT of Aluminium during theprevious period 2003-04.There are generally 2 types of Inventory :
1. Process or movement inventory2. Organization inventory
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Process or movement inventory are required because it takes time to completeprocess/operation and to move product from one stage to another. The quantity of suchinventory could be (average output of process X time required for the process).For Example:
If the average output of the process is 500 units / day and process time is 5 days, theaverage process inventory will be 2500 units. If the average sales at the warehouse are 100units a week and transit time requires to ship the goods from the plant to warehouse is 3weeks. Then, the average movement of inventory could be 300 units.
Organisation inventory are maintained for planning and scheduling successiveoperation. Raw materials inventory enables a firm to decouple purchasing and productionactivities to some extent. It provides flexibility in purchasing and production.
In process inventory provides flexibility in production scheduling so that an efficientschedule and high capacity may be attained. Without in process inventory a bottleneck in anystage of production process can occur. This results in delay and idle facilities.
Finished goods inventory marketing activities so that desirable results can beachieved. If adequate finished goods inventory is available the marketing department canmeet the needs of the customers promptly irrespective of quantity and composition of goodsflowing out of the production line currently.
INVENTORY CONTROL SYSTEM :A proper inventory control not only serves the acute problem of liquidity but also
increase profits and cause substantial reduction in the working capital of the concern. In anyscheme of inventory control following things have to be studied.
1) Stock level2) Determination of safety stock3) System of ordering for inventory4) Preparation of inventory report
STOCK LEVELS :Carrying of too much or too little of inventories is detrimental to the company. If the
inventory level is too the company will face frequent stock outs inventorying heavy orderingcosts and if inventory level is too high it will be unnecessary tie-up of capital. Therefore, anefficient inventory management requires that a company should maintain an optimum level ofinventory where inventory costs are minimum and also there is no stock out.THE VARIOUS STOCK LEVELS MAINTAINED AT NALCO :1) MINIMUM LEVEL:-
This represents the quantity which must be maintained in hand at all times. If stocks areless than the minimum level then the work will stop due to shortage of material .Following factors are taken into account while fixing minimum stock level.a) Rate of consumption:
It is the average consumption of material in the company. The rate of consumptionwill be decided on the basis of past experience and production plans.
b) Nature of material:- It also affects the minimum level. If a material is required only against special ordersof the customer than minimum stock will not be required for such material.
2) RE-ORDING LEVEL: When the quantity of materials reaches a certain figure than fresh order is sent to
get materials again. The order is sent before the materials reaches minimum stock level.Reordering level is fixed between maximum and minimum level. Therate of consumption,number of days required to replenish the stock and maximum quantity of materialsrequired on anyday are taken into account while fixing reordering level.
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REORDERING LEVEL= maximum consumption X maximum reorder period.3) MAXIMUM LEVEL:-
It is the quantity of materials beyond which a company should not exceed itsstock. If the quantity exceeds maximum level limit then it will be over stocking. Acompany should avoid over stocking because it will result in high materials cost.MAXIMUM STOCK LEVEL= Reordering level+reordering quantity (minimum consumption X minimum reorderingperiod)
4) DANGER LEVEL:-It is the level beyond which materials should not fall in any case. If danger level
arises then immediate steps should be taken to replenish the stock even if more cost isincurred in arranging the materials. If materials are not arranged immediately there is apossibility of stoppage of work.DANGER LEVEL= Average consumption X maximum reorder period for emergency purchases.
TOOLS AND TECHNIQUES OF INVENTORY MANAGEMENT:1) ABC ANALYSIS:-
This is based on consumption. The materials are divided into a number of categoryfor adopting a selective approach for material control. It is generally seen that in amanufacturing concern a small percentage of items contribute a large percentage of value ofconsumption and a large percentage of items contribute a small percentage of values.
Past experience in NALCO has shown that almost 10% of the items contribute to70% of values of consumption and this category is called a category. Category C coversabout 70% of items of materials which contribute only 10% of values of consumption.
Class Number of item(%) Value of itemA 10 70B 20 20C 70 10
Thus a highest control should be exercised on ‘Item A’ inorder to maximizeprofitability on its investment. In case of ‘Item C’ simple controls will be sufficient. A littlemore attention should be given towards ‘Item B’.The major inventory items in NALCO are composed of:
Raw Materials: That consists of CP coke, CT pitch, Aluminium Fluoride, Pigiron, Heavy fuel oil, Light Diesel oil, Alumina and anodes. As NALCO is aprocess industry, it always maintains sufficient stocks 45 days. The companyis maintaining the stock of raw material effectively and it has not faced asituation like out of stock raw materials during the recent past.
Stores and Spares: The spares of different machines come along with themachinery at the time of their import. Highly valued spares lying with theplant and machinery are the insurance spares. The high value spare parts areproduced against indents raised by user departments while recurring spareparts are purchased at regular intervals at automatic procurement (AP) spares.
Intermediary goods: Which consists of Green Anodes, Baked Anodes, Anodestem, Cast iron holders etc. of which NALCO has installed its own plant forproducing the Green and Baked anodes and imports them only when there isa shortage.
Finished goods: That consists of Alumina, Aluminium Ingots, Saw Ingots,Billets, Wire bars, sheets etc. The finished products of NALCO more veryfast and hence, the stock of finished goods is very less in the company.
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The company also effectively reuses the rejected inventory. The reject inventory inNALCO comprises of anode butts & rejects and rejects of finished products. Anode rejectsare recycled and reused in the process while finished stock rejects are either recycled are orsold at a lower price. The company is exercising good control to minimize the rejects.
Material Cost_per_unit
142K Porpex F.C 309,844.40
Alclar - 661 169,991.25
Alclar - 662 204,936.67
Bauxite -
C.G.M 145,471.25
Caustic Soda - Vizag (Indigeneous) 18,200.09
Caustic Soda (Imp) Damanjodi 17,290.05
Caustic Soda (Ind) Dmj. 18,830.63
Caustic Soda-Vizag (Imported) 16,806.11
Charm Non Woven Filter Bag. 2,172.30
Charn Non Wovenfilter Cloth,Kelly Filter. 958.00
Coal 1,093.12
Cylindrical Filter Bag Size 130Mm X 250Mm Long 205.31
Defoamer (N-85320) 211.12
Disc Filter Bags -
Discfilter Bags In Clartex 4/N/23 S12 With Dim 2020X240X700 Mm 2,172.30
Disk Filter Nonwoven Cloth For Jack Filter 564.37
Filter Bag For Bag Filter Model 135.93
Filter Bag Made Of Woven Cloth Used Without Inner Bag For Db Filter 340.08
Filter Bag Made Of Woven Cloth Used Without Inner Bag Gf Filter 680.16
Filter Bags 21.33
Filter Bags (For Kw-302) 130X3194 Mm Long Make: Masturilal 400.40
Filter Bags 6 14.94
Filter Bags 700 Mesh Course 334.03
Filter Bags For Door Oliver Disc Filter. 351.22
Filter Bags Q.No.Pe/Ind/Pe/501/Polyster Non-Woven Needle Belt 200.31
Filter Bags Size 152X3664 Mm Make: Masturilal,Kw-301 468.00
Filter Cloth For (Fp 101 To 105) 212,959.00
Filter Cloth For 207 A/B 130,333.50
Heavy Fuel Oil 13,687.61
Hydrated Lime -
Ldo 23,272.22
Lime 2,451.87
Low Ash Calorific Coal (Imported) 2,879.34
Media Cloth 2,696.27
Media Cloth 1,600.63
Media Cloth 658.37
Nalco Synthetic Flocculant H-120 146,495.79
Non Oven Disc Filter Cloth For Bokela Disc Filter 514.16
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Non Woven Filter Bags For Bokela Filter Make-Supreme 498.83
Non Woven Filter Bags For Db Filter Make Supreme 338.49
Non Woven Filter Bags For Gaudfrin Filter Make Supreme 551.78
Poly Propylene Thread 1,203.50
Polyster Non Woven Cloth Filter Bags 67.50
Sector Clamp For Door Oliver Disk Filter 6,397.90
Sodium Silicate 5,937.30
Superfloc Hx - 400 142,144.17
Superfloc Hx-401 165,874.46
Synthetic Flocculant Dk Set Is 1177 Sp 308 166.40
Synthetic Flocculant Dk Set Is 1177A15 182.07
Synthetic Flocculant, Nalco 85035 164.32
Under Cloth For New Drum Filter Size 6,661.04
Wash Coal 1,532.52
Wheat Bran 6,057.85
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Trend Analysis of Ratio of Inventory to Current Assets:
(Rs.in Crores)
YEAR INVENTORY CURRENT
YEAR
RATIO
2000-01 407.20 1048.24 38.8%2001-02 483.40 1138.45 42.5%2002-03 489.25 1006.50 48.6%2003-04 480.48 990.51 48.5%2004-05 529.06 1811.04 29.2%
The level of Inventory in NALCO remains more or less around 50 percent of current
assets. The amount of inventory also remains around 400 to 550 crores.
Trend Analysis of movement of Avg. Inventory to Sales:
(Rs. in Crores)
Year Inventory Avg.Inventory
Increase/Decrease
% ofIncrease/Decrease
Sales Increase/Decrease
% ofIncrease/Decrease
2000-
01
407.20 423.72 -18.08 -4.10% 2408.60 266.28 12.43%
2001-
02
483.40 445.30 21.58 5.10% 2385.42 -23.18 -0.96%
2002-
03
489.25 486.33 41.03 9.21% 2739.67 354.25 14.85%
2003-
04
480.48 484.87 -1.46 -0.30% 3338.87 599.20 21.87%
2004-
05
529.06 504.77 19.90 4.10% 4439.99 1101.12 32.98%
From the above trend analysis table we can notice that except in the year 2001-02, the
amount of inventory and sales has been increasing gradually year by year. The sharp dip in
sales during 2001-02 has been due to an unprecedented crisis in 2001 summer in which
almost 40% of pots had to be shut off resulting in considerable loss of production.
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Trend Analysis of Inventory Turnover Ratio of NALCO:
(Rs. In Crores)
YEAR SALES INVENTORY INVENTOY
TURNOVER
RATIO
STORAGE
PERIOD
(in days)2000-01 2408.60 407.20 5.92 622001-02 2385.42 483.40 4.93 742002-03 2739.67 489.25 5.60 652003-04 3338.87 480.25 6.95 532004-05 4439.99 529.06 8.40 44
From the above trend analysis table, we can notice that the inventory turnover ratio of
NALCO hovers around 4 - 8.50 times in a year and the storage period of inventory is
between 40 and 75 days. NALCO had a better Inventory Management Methods and it is the
last stage of moving inventories.
Trend Analysis of Finished Goods Turnover Ratio of NALCO:
(Rs. In Crores)
Year Sales Avg. stock of
Finished
Goods
Finished
Goods Turnover
Ratio
Holding period
(in days)
2001-02 2385.42 154.61 15.4 242002-03 2739.67 150.97 18.2 202003-04 3338.87 143.23 23.3 162004-05 4439.99 162.13 27.4 13From the above trend analysis table we can notice that the finished goods turnover ratio
of NALCO is gradually increases at 27.4 times in the current year. The storage period of
finished goods is between 10 and 25 days, which is very good and reflects the huge demand
of the finished products of NALCO.
2) XYZ ANALYSIS:
This is based on inventory and all the calculations and making categories are some as
that of ABC analysis.
X = 70% of inventory.Y = 20% of inventory.Z = 10% of inventory.
3) FSN ANALYSIS
‘F’ stands for fast moving items which includes items having 3 or more times
movement in a year. ‘S’ stand for slow moving items which includes items having less than 3
times movement since 5 years. ‘N’ stands for non-moving items which includes items-
a) Not moved since 5 years.
b) Received before 5 years. It mainly includes insurance items.
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The FSN Analysis is done by NALCO to identify the fast moving, slow moving , non-
moving items and as per the requirement of accounting standard a provision of 20% if the
value of non-moving itemsare made on the books of account and charged to profit and loss
account.
4) PERPETUAL INVENTORY;
NALCO follows the perpetual inventory system which is a system of maintaining bin
cards and stores ledger along with continuous stock verfication . This is a method of
ascertaining balance after every issue and receipts of material through stock records to
facilitate regular checking and to avoid closing down for stock.
In order to ensure accuracy of perpetual inventory records NALCO checks the physical
stock by a program of continuous stock checking through an outside agency of continuous
stock checking through an outside agency who are the practicing chartered accountants. Any
difference noted between the physical stock and stock records are investigated and
rectifications are made the and there. Perpetual inventory system is used as an aid to material
control because balance of stock shown by in cards or the stores ledger should agree with the
balnce ascertained by physical checking. If the physical verfication reveal that the physical
balance is more than the balance shown by the bin or stores ledger, a debit note is prepared
and stock records are adjusted accordingly. Similarly if there is a shortage of stock , credit not
is prepared and stock records are adjusted accordingly. So that, it shows the actual balance.
Stock adjustment account is prepared and debited with shortage of stock and credited wit
surplus. At the end of the year the balance of the adjustment account is transferred to profit &
loss account.
ADVANTAGES:
The following are the are the advantagesof perpetual inventory system.
1) it obviates the necessity of the physical checking of all items of stores at the end of
the year and thereby avoids dislocation of production.
2) A system if interval check in operation all the time because bin cards and stores
ledger acts on the cross check on each other.
3) The capital invested in stores are kept under control because actual stock can be
compared with minimum and maximum stock level
4) Shortage of stocks are readily discovered and efforts are made to avoid shortage of
stock in future.
EOQ: (ECONOMIC ORDERING QUANTITY)
A decision about how much order has great significance in inventory management. The
quantity to be purchased should be neither too small nor too big because costs of buying and
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carrying materials are very high. EOQ is the size of the lot to be purchased which is
economically viable. It is the point at which inventory carrying costs are equal to the ordering
costs. It is assumed at costs of managing inventory is made of solely of two parts that means
ordering cost & carrying costs.
Assumptions of EOQ :
The following assumptions are made;
1) The goods can be purchased whenever these are needed.
2) The quantity to be purchased by the concern is certain.
3) The prices of goods are stable. It results to stabilize carrying costs.
EOQ can be calculated with the help of following formula:
EOQ = 2AS / I Where,
A = Annual Consumption in rupees
S = Cost of placing an order
I = Inventory carrying costs of one unit.
METHOD OF VALUATION OF MATERIALS:
The value of materials have a direct bearing on the income of a concern, so it is necessary
that a method of pricing materials should be such that it gives a realistic values of stock. The
traditional method of valuing materials ‘Cost price or Market Price’ whichever is less is no
longer the only method.
If management is interested in showing more profits then it can choose such a
method, which will show more stock or vice-versa. So, to safeguard the public interest the
Government of India had instituted statutory controls to prevent frequent change of materials
valuation methods. A concern will have to use a particular valuation method for at least 3
years and any change thereafter must be approved by the board.
NALCO has adopted the weighted average method for valuation of its materials. In this
method, the total number of items in stock divides the total cost of all the materials. The price
calculated in this manner will be used for issue of materials upto the time a fresh purchase has
not been made. After a fresh purchase the quantity will be added to the earlier balance
quantity and material cost will be added to the earlier costs. A fresh price is calculated by
dividing the changed total cost by the number of units in stock after the purchase. A new price
is calculated whenever a fresh purchase is made.
CONCLUSION :
The Inventory Management in NALCO is very systematic and the fact is confirmed
by the following comparative inventory analysis of last 3 years.
INVENTORY LEVELS :
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Inventory levels at the close of the last 3 years are given below:
(Rs. In Crores)
2002-03 2003-04 2004-05Raw Materials 71.61 48.08 56.17Stores, Spares & Others 280.74 283.55 297.48Finished Goods 137.60 148.85 175.41Percentage (%) of finished
goods to sales
5% 4.5% 4%
NALCO has nicely accepted the fact that a most rigid control over cash is required so
also it is desirable to have an efficient as well as equipped stores department to exercise an
effective material control because materials become cash on the sale of finished products
which represents an equivalent amount of cash.
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CHAPTER – III
A STUDY OF FINANCIALMANAGEMENT OF NALCO
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A STUDY OF FINANCIAL MANAGEMENT OF NALCOINTRODUCTION:
As of the late 1970’s the financial manager had transcended the traditional role inpreparing reports and raising external funds. As business became larger and more complex,finance assumed the responsibilities of dealing with the problems and decisions associatedwith managing the firm’s assets. The Financial Manager is presently involved with theallocation of funds to different projects and activities with the measurement of results ofeach allocation.
Today’s financial manager deals with variety of development that effects the firmsliquidity and profitability including:
High finance cost identified with risk bearing investment in a capital intensiveenvironment.
Diversification by firms into different business, markets and product lines.
High rate of inflation that significantly effect planning and forecasting of the firmsoperation.
Emphasis on growth, with its requirement for new sources of fund and improve use ofexisting funds.
High rate of change in technology with an accompany need for expenditure onresources and development.
Speedy dissemination of information, employing high speed computers and nationwide and world wide net work for transmitting financial and operating data.
FINANCE FUNCTION:
There are four important Management Financial Functions:
Investment or long term asset mixed decisions.
Financing or capital mixed decision.
Dividend or profit allocation decisions.
Liquidity or short term asset mixed decisions.
FINANCIAL GOAL:
The starting point for developing goal oriented financial structure is the defining ofworkable goals for the firm as a whole. Two primary goals are commonly encounter i.e.,maximization of wealth.
1. MAXIMISATION OF PROFITS:
Profit maximization has the benefit of being simple and straight forward statement ofpurpose. It is easily understood as a rational goal for a business and it focuses the firms effortstowards making money. But, the precise meaning of the profit maximization objective isunclear. The definition of the profit is ambiguous.
2. MAXIMISATION OF WEALTH:
The second frequently encountered objective of the firm is to maximize the value ofthe firm over the long run. This goal may also be stated as the maximization of wealth withwealth defined as the net present worth of the firm. Maximization of wealth implies otherfactors in addition to profit. As a general guideline the firm that is maximizing wealth must dothe following:
Avoid high levels of risk.
Pay dividends.
Seek growth.
Maintain market price of stock.
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Maximization of wealth is more useful than maximization of profits as it balances theprofit factor with related goals such as growth, stability, risk avoidance and the market priceof the firms stock.
FUNCTIONS OF FINANCIAL MANAGEMENT:
In the context of achieving the goals, the Financial Manager performs tasks in severalareas. Each task is linked with the goal of liquidity, profitability or both. The secondclassification method focuses on what is being managed-Assets or funds.
FUNCTIONS LEADING TO LIQUIDITY:
In seeking sufficient liquidity to carry out the firm’s activities the Financial Managerperforms tasks such as:
a. Forecasting Cash Flow.
b. Raising Funds.
c. Managing the flow of internal funds.
FUNCTIONS LEADING TO PROFITABILITY:
In seeking profit for the firm the Financial Manager will provide specific input
into the division making process based on his financial training and actions with
respect to profitability. Some of the specific functions are:
a. Cost Control.
b. Pricing.
c. Forecasting future profits.
d. Measuring cost of capital.
FINANCIAL POSITION OF NALCO
Following is the financial position of Nalco for last 3 years.
(Rs. In Crores)
Liabilities 2007-08 2008-09 2009-10(a) Paid up capital
(i) Government
(ii) Others
(b) Reserves & Surplus
Free reserves & surplus
Capital reserves
Debenture redemption reserve
(c) Borrowing from
(i) Non-convertible Redeemable
Debenture
(ii) Bonds
(iii) Foreign currency loan
561.50
82.81
2147.94
1.22
431.77
643.54
440.00
145.67
561.50
82.81
2340.40
1.17
324.16
428.33
440.00
---
561.50
82.81
2894.05
1.12
217.19
214.39
440.00
---
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(iv) Commercial paper
(v) Export packing credit
(vi) Other loan
(d) Current liability & provision
(e) Deferred tax liability
196.37
137.87
---
719.20
492.13
---
253.34
199.77
1011.60
573.17
---
---
---
864.28
609.99 TOTAL 6000.02 6219.25 5885.33
Assets 2007-08 2008-09 2009-10
(f) Gross Block
(g) Less cumulative Depreciation
(h) Net Block
(i) Capital Work in progress
(j) Investment
(k) Current Assets, Loans & Advances
(l) Miscellaneous Expenditure not written off
6277.75
3388.13
7459.96
3747.01
8092.87
4189.39 2889.62
1920.81
50.00
1138.45
1.14
3712.95
1298.66
200.00
1006.50
1.14
3903.48
791.34
200.00
990.51
---
TOTAL 6000.02 6219.25 5885.33
(m) Working Capital (k)-(d)
(n) Capital Employed (h)+(m)
(o) Net Worth (a)+{(b)(i)+(ii)}-(l)
(p) Net Worth per rupee of paid up capital (Rs.)
419.25
3308.87
3222.88
5.00
(-) 5.10
3707.85
3307.73
5.13
126.23
4029.71
3755.55
5.83
FINANCIAL MANAGEMENT OF NALCO:Under extremely difficult logistics of implementing a Multi-National Green Field
Project, NALCO successfully constructed and commissioned each of its units on schedule,within estimated cost, a feat which has few parallels in Indian Public Sector.
A significant achievement in the Financial Management of NALCO has been theprepayment of overseas loans amounting to Rs. 978/- Crores during March’95 to March’97period. This proactive measure has not only brought down the interest liability from Rs.184.03 Crores in 1994-95 to Rs.64.83 in 1995-96 to Rs. 9.08 Crores in 1996-97 but alsohelped to achieve around Rs.45 Crores saving on adverse exchange rate variations as on 31 st
March’98. At this point of time the debt liability of NALCO is limited to Rs.580 Crores inform of a 20 Billion Japanese Yen loan repayable in full by end of Sept’98.
Because of Nalco’s efficient financial Management strict fiscal discipline endeavor toincrease targeted production, which are the essential ingredients for the success of NALCOwhich has made the company a Zero debt company as on 30th September,1998.
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CHAPTER – IV
RATIO ANALYSIS
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RATIO ANALYSIS
INTRODUCTION
Ratio analysis is a powerful tool of financial analysis. A ratio is defined as “the
relationship between two or more things”. In financial analysis, a ratio is used as a bench
mark for evaluating the financial position and performance of a firm. The relationship
between two accounting figures, expressed mathematically, is known as a financial ratio.
Ratios help to summarize the large quantities of financial data and to make qualitative
judgment about the firm’s financial performance.
SIGNIFICANCE OF RATIO ANALYSIS :
The ratio analysis is one of the most powerful tools of the financial analysis.
1. It is used as a device to analyze and interpret the financial health of
an enterprise.
2. With the use of ratio analysis one can measure the financial condition
of a firm and can point out whether the condition is strong, good,
questionable or poor. The conclusions can also be drawn as to
whether the performance of the firm is improving or deteriorating.
Thus, ratios have wide applications and are of immense use today.
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Financial Ratios :
Sl.No. Ratios Formula’s 2010-11 2009-10
1. Current Ratio CA/CL 2.25 1.14
2. Liquid Ratio LA/CL 1.59 0.59
3. Stock Turnover Ratio Sales/inventory 8.40 6.95
4. Debtors Turnover Ratio Sales/Debtors 47.84 32.66
5. Avg. Collection Period No. of Working daysDebtors Turnover Ratio
8 days 11 days
6. Creditor Turnover Ratio Purchases/Creditors 1.90 1.81
7. Avg. Payment Period No. of Working daysCr. Turnover Ratio
192 days 202 days
8. W.C Turnover Ratio Sales/Net W.C 4.42 26.50
9. Proprietary Ratio Share Holders FundTotal Assets
0.87 0.75
10. G.P Ratio (G.P/Net Sales) X 100 58.10 51.50
11. Debt-equity Ratio Outsiders FundSh. Holders Fund
0.17 0.40
12. F.A Turnover Ratio Sales/Fixed Assets 1.02 0.71
13. Net Profit Ratio (N.P/Sales) X 100 27.81 22.10
14. EPS Profit available for Eq.Sh.Holders No. of Eq. Shares
19.17 11.44
15. Dividend Yield Ratio Dividend Per ShareMarket Value Per Share
0.06 0.08
16. Market Value Per Share Sh. Holders FundsNo. of Eq, Shares
72.91 58.31
17. Dividend Per Share Div. Rate + Div. TaxNo. of Eq. Shares
4.55 4.51
18. Dividend Payout Ratio Div. Per Eq. SharesEarning Per Share
0.24 0.39
19. Price earning Ratio Market Value Per ShareEarning Per Share
3.80 5.1
20. Capital Gearing Ratio Eq. Sh. Capital+R&SPref. Capital+Long-term debt
- 5.74
21. Return on Sh. Holders Investment
N.P(after Int & Tax)Sh. Holders Funds
0.31 0.23
22. Ratio of Reserves to Eq. Capital
ReservesEq. Sh..Capital
6.29 4.83
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ANALYSIS OF RATIO :
1. SHORT-TERM SOLVENCY POSITION :
Short-term solvency position of the company is very sound. The current ratio in
2009-10 was 114% and in 2204-05 it is 225% which is well above the norms of 195% to
200%.
The liquid ratio which was 59% in 2009-10 and 159% in 2010-11 is also well above
the general accepted principles of 250%.
The Inventory turnover ratio is increasing constantly over the years which shows the
qualitative output of the company and thereby the constant increase in demand.
The company generally sells against advance payments, against 60 days usuance L/C
and against 60 days stand by L/C. Thus, on an average the credit terms are 2 months. The
average collection period for 2009-10 was 11 days and for 2010-11 it is 8 days which shows
the efficiency of receivables management.
The working capital turnover ratio was 265% in 2009-10 and is 442% in 2010-11
which shows the defficiency with which the working capital is being used by the company.
2. LONGTERM SOLVENCY POSITION
The long term solvency position of the company is very encouraging. The debt-equity
ratio in 2009-10 was 40% and in 2010-11 is 17% which shows efficiency of servicing loans
by the company. Though the debt-equity ratio is considered to be a satisfactory ratio, a low
ratio is considered as favorable from the long-term creditors point of view because a high
proportion of owners fund provides a larger margin of safety for them.
The proprietory ratios also supports the view strongly as the shareholders fund 75%
in 2009-10 and 87% in 2010-11 of the total assets. This proves that the company is not self-
sufficient in financing its affairs.
3. ANALYSIS OF PROFITABILITY
The profitability of the company is showing a very encouraging trend. Every year it is
touching a new height.
The net profit ratio of the company in 2009-10 was 22% and in 2010-11 it is 28% of
turn over which indicates a satisfactory return on its investment and also indicates the
company’s capacity to face adverse economic conditions such as price competition, low
demand etc.
4. OVERALL PROFITABILITY RATIO
The return on shareholders on investment in 2009-10 was 23% and 31% in 2010-11
which shows the trend of growth and prosperity in the company’s profitability and efficiency.
The earnings per share(EPS) was 11.44 in 2009-10 and 19.17 in 2010-11 which
shows the constant increase in EPS over the years. The EPS looks to be low even through the
company have earned huge profits in both the years because of the high equity base of the
company.
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The price earning ratio (P/E ration) in 2009-10 was 5.1 and in 2010-11 it is 3.80
which is showing the week fundamentals of the company’s sales.
5. ANALYSIS OF CAPITAL STRUCTURE
The capital gearing ratio for the year 2009-10 and 2010-11 are 5.74 and NILL
respectively which shows the defficient debt servicing of the company.
The reserve to equity-capital ratio of 2009-10 and 2010-11 are 4.83 and 6.29
respectively which shows that high margin of profit are retained by the company for future
growth.
CONCLUSION:
The financial results over the year reflect the company’s robust performance in
production & marketing. The sales turnover grow by 32.49% over the previous year to reach
4439.99 Crores.
Net profit grew by 77.65% over the previous year to reach 1870.27 Crore. The export
earning of 2200.25crores including a foreign exchange component of 2150.75crores is yet
another landmark achievements of the year.
The gross margin has gone up by 48.39% over the previous year to reach at 2393.84
Crores.
The company pursued over the year its policy of proactive servicing of the overseas
debt. This has resulted in a total payback of RS. 670.05 Crores including short term
borrowing Rs. 456.11 Crores.These measures have brought down the outstanding commercial
borrowing to Rs.214.39 Crores.
The debt. equity ratio has decreased from 40% to 17% as compared to previous year.
The EPS has almost improved from Rs. 11.44 in 2009-10 to Rs.19.17 in 2010-11.The current
ratio improved from 114% in 2009-10 to 225% in 2010-11. Despite high equity base the
market has been taking keen interest in the company’s scrip because of consistent
performance and strong fundamentals.
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CHAPTER – V
FUNDS FLOW AND CASH FLOW
STATEMENT
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FUNDS FLOW STATEMENT
The statement of changes in financial position, prepared to determine only the sourcesand uses of working capital between dates of two balance sheets, is known as the funds flowstatements. Working capital is defined as the difference between current assets and currentliabilities. It indicates the various means by which funds are obtained during a particularperiod and the ways in which these funds were employed. It is a statement of sources andapplications of funds.
CASH FLOW STATEMENT:An analysis of cash flows is useful for short-run planning. A firm needs sufficient
cash to pay debts maturing in the near future, to pay interest and other expenses and to paydividends to share holders. The firms can make projection of cash inflows and outflows forthe near future to determine the availability of cash. This cast balance can be matched withthe firm’s need for cash during the period, and accordingly, arrangement can be made to meetthe deficit or invest the surplus cash temporarily. A historical analysis of cash flows providesinsight to prepare reliable cash flow projections for the immediate future.
“A statement of changes in financial position on cash basis, commonly known as thecash flow statement, summarizes the causes of changes in cash position between dates of twobalance sheets”. It indicates the sources and uses of cash. The cash flow statement similar tothe funds flow statement except that it focuses attention on cash instead of working capital(funds). COMPARISON BETWEEN FUNDS FLOW STATEMENT AND CASH FLOWSTATEMENT:
A cash flow statement is much similar to a funds flow statement as both are preparedto summaries the cases of changes in the financial position of a business. However, followingare the main difference between a funds flow and a cash flow statement.1) Funds flow statement is based on a wider concept of funds i.e. working capital while cash
flow statement is based on the narrower concept of funds i.e. cash only, which is only oneelement of working capital, the others being debtors, stock, temporary investment, billsreceivable etc.
2) Funds flow statement is based on accrual basis of accounting while cash flow statement isbased on cash basis of accounting. In each flow statement while calculating operatingprofits, adjustments for prepaid and outstanding expenses and incomes are made toconvert the data from accrual basis to cash basis; but no such adjustments are required tobe made while preparing a funds flow statements.
3) A funds flow statement s does not reveal changes in current assets and current liabilities,rather theses appear separately in a schedule of changes in working capital. No suchschedule of changes in working capital is prepared for a cash flow statement and changesin all assets and liabilities fixed as well as current are summarized in the cash flowstatements.
4) Cash flow statements is prepared by taking the opening balance of cash adding to this allthe inflows of cash and deducting the outflows of cash from the total. The balance i.e.opening balances of cash, is reconciled with the closing balance of cash. No such openingor closing balances appear in a funds flow statements. The net difference between sourcesand applications of funds does not represent cash rather it reveals the net increase ordecrease in working capital.
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5) Funds flow statements is useful in planning intermediate and long-term financing while acash flow statement is more useful for short-term analysis and cash planning of thebusiness.
IMPORTANCE OF FUNDS FLOW STATEMENT:A funds flows statement is an essential tool for the financial analysis and is of primary
importance to the financial management. The importance’s of funds flow statement are asfollows:1) With the help of funds flow statement, a firm can plan the deployment of its resources and
allocate them among various application.2) A projected funds flow statement acts as a guide for future to the management. The firm’s
future needs of funds can be projected well in advance and also the timing of these needs.3) A funds flow statement helps in explaining low efficiently the management has used its
working capital and also suggests ways to improve working capital position of the firm.
IMPORTANCE OF CASH FLOW STATEMENT:Cash flow statement is of vital importance to the financial management. It is an essential
tool of financial analysis for short-term planning.1) Since a cash flow statement is based on the cash basis of accounting, it is very useful in
the evaluation of cash position of a firm.2) A Series of intra-firm and inter- firm cash flow statement reveal whether the firm’s
liquidity is improving or deteriorating over a period of time and in comparison to otherfirms over a given period of time.
3) Cash flow statement helps in planning the repayment of loans, replacement of fixed assetsand other similar long- term planning of cash. It is also significant for capital budgetingdecisions.
DEFINITIONS:For the cash flow analysis of NALCO the following terms have been used with meaning
specified.CASH:
It comprises of cash in hand, cash at bank and demand deposits.CASH EQUIVALENTS:
These are short-term highly liquid investments that are readily converted into cashwhich are subject to insignificant risk of changes of values.OPERATING ACTIVITIES: These are principal revenue producing activities of the enterprise and other activitiesthat are not investing or financing activities.INVESTING ACTIVITIES: These are acquisition of long- term assets and other investment not included in cashequivalent.
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FINANCING ACTIVITIES: These are activities that result in changes in size and composition of owner’s capital
(including preference share capital in case of a company) and borrowing of an enterprise.
I. CASH AND CASH EQUIVALENT:Cash equivalent are held for the purpose of meeting short- term cash commitment rather
than for investment purpose. For an investment to quality as a cash equivalent it must bereadily convertible to a known amount of cash therefore, an investment normally quality as acash equivalent only when it has a short maturity of say, 3 months or less from the date ofacquisition. Investments in shares are in substance cash equivalents. E.g. in case of preferenceshare acquired within a short period of maturity and with specified redemptions date.
Bank borrowings are considered to be financing activities however bank overdrafts whichare repayable cash management. In theses cases bank overdrafts are included as cashequivalent. Cash flows exclude movement between items that constitute cash or cashequivalent because these components are the parts of the cash management of the enterpriserather than part of its operating, investing and financing activities. Cash management includesinvestment of excess cash in cash equivalents. II. OPERATING ACTIVITIES:
The amount of cash flows arising from operating activities is a key indicator of the extentto which the operations capability cash to repay loans, maintain the operating capabilityenterprise, pay dividends and make new investment without recourse to external sources offinancing.
Cash flows from operating activity are primarily derived from principal revenueproducing activities of the firms. Therefore, they generally result from the transaction andother events that are taken into account for the determination of net profit or loss.
Examples of cash flow from operation activities are:1. Cash receipts from sale of goods and rendering of services.2. Cash receipts from royalties, fees, commissions and other revenues.3. Cash payment to suppliers of goods and services.4. Cash payment to and on behalf of the employees.5. Cash payments or refunds of Income Tax unless they are specifically identified with
financing and investing activities.6. Cash receipts and payments from contracts held for dealing and trading purposes.
Some transactions such as sale of a part of land may give rise to a gain or loss whichis included in determination of net profit or loss. However, cash flows relating to suchtransactions are cash flows investing activities. An enterprise may hold securities and loansfor dealing or trading purposes in which they are similar to inventory acquired specifically forasset. Therefore, cash flows arise from purchase or sale of dealing or trading securitiesclassified as operating activities. Since, they relate to main revenue producing activity ofenterprise.
III. INVESTING ACTIVITIES:The separate disclosure of cash flows arising from investing activity is important
because the cash flow represents the extent to which expenditures have been made forresources intended to generate future income and cash flows.Examples of cash flows arising from investing activities are :
1. Cash payments to acquire fixed assets. These payments include those relating tocapitalized R & D costs and self constructed fixed assets.
2. Cash receipts for disposal of fixed assets.
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3. Cash payments to acquire shares, warrants or debt instruments of other enterprise andinterest in joint ventures.
4. Cash receipts from disposal of shares, warrants or debt instruments of other enterpriseand interest in joint ventures.
5. Cash advances and loans made to the other party.6. Cash receipts from repayment of loan made to other party.7. Cash payments from future contracts, forward contracts, option contracts and swap
contracts except when contracts are held for dealing or trading purpose or paymentsare classified as Financing Activities.
IV. FINANCING ACTIVITIES:The separate disclosure of cash flows arising from financing activities are important
because it is useful in predicting claims on future cash flows by providers of loan to theenterprise.Examples of cash flows from financing Activities are:
1. Cash proceeds from issuing shares of similar instruments.2. Cash payments to owners to acquire or redeem the enterprises shares.3. Cash payments for issuing debentures, loans, notes, bonds and other short-term and
long-term borrowings.4. Cash payments for the amount borrowed.
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FUNDS FLOW STATEMENT FOR 2009-10
(Rs. In Crores)
Sources of Fund Application of FundFunds From
Operation
Decrease in
Working Capital
1217.71
14.05
Increase in Fixed Asset & Capital Work in
Progress
Increase in Investment
Dividend Paid
Decrease in Borrowing
125.59
----
436.12
670.051231.76 1231.76
STATEMENT OF CHANGES IN WORKING CAPITAL
Rs. in Crores)
Particulars 2004(Rs.)
2003(Rs.)
Effect on WorkingCapitalIncrease Decrease
Current Assets:InventoriesSundry DebtorCash & Bank BalanceOther Current AssetsLoans & Advances
Current Liability:Sundry CreditorOther Current LiabilitySecurity DepositsBank OverdraftsProvision for TaxProvision for leave postretirement medical benefitsInterest Outstanding
Working Capital (CA-CL)Net Decrease in WorkingCapital
480.48 102.24 98.36 86.51 222.92
489.25 101.83 49.56 89.80 276.06
0.41 48.80
67.34
11.44 24.90
0.54
14.05
8.77
3.29 53.14
98.51
0.99 2.78
990.51 1006.50
226.29 243.15 61.75 8.09 1.96 23.70
8.60
293.63 144.64 73.19 32.99 0.97 20.92
9.14 573.54 575.48 416.97 14.05
431.02
431.02 431.02 167.48 167.48
CASH FLOW STATEMENT (For the year 2009-10)
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Rs. in Crores)Inflow Out flowOpening balance of cash &cash equivalent.Cash from operationSale of fixed assetsInterest receivedIncome from forward contractsGain from exchange ratevariation
49.56
1388.94 0.06 30.22 0.90 7.76
Purchase of fixed assetsRedemption of debenturesPayment of short-termborrowingsInterest & financing chargesDividend paidClosing balance of cash &cash equivalent
187.92 213.94 456.11
85.11 436.12 98.34
1477.44 1477.44
CALCULATION OF CASH FROM OPERATION
Net profit for the year Add: non cash items already debited Depreciation Interest and financing charges ProvisionsClaims/recoverable written of Stores & spares written off Deferred revenue expenditures Loss on sale of fixed assets
Less: non cash items already credited Interest income Income from forward contracts Gain from exchange rate variation
Operating profit before working capital changesAdd: adjustments for Inventories Trade & other receivables Trade payables
Less: Direct Tax paid net of TDS
445.13 84.57 0.83 0.02 3.28 1.14 0.29
1052.76
535.26
23.96 0.90 7.78 42.64
5.75 56.95 53.96
1555.38
116.66 1672.04
283.10
Net cash from operation 1388.94
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CHAPTER – VI
REFINERY PROCESSOVERVIEW
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REFINERY PROCESS OVERVIEW
INTRODUCTION
o NALCO’s Alumna Refinery was set up with the technical collaboration of AluminiumPechiney, France
o Installed Capacity
Original 0.8 million MT PADebottlenecking 1.05 million MT PAExpansion 1.575 million MT PA
o CommissioningOriginal 1987 FebruaryDebottlenecking 2000 JuneExpansion 2001 December
BASIC TECHNOLOGY
o Predesilication before digestion
o Atmospheric digestion process as bauxite is primarily Gibbsitic
o Removal of coarse sand particles & Post-desilication
o Settling in Flat bottom settlers
o European high solid,nucleation based precipitation
o Interstage coolers for enhanced productivity
o Circulating Fluid Bed Calciners
o 6-effect backward feed falling film type Evaporation
o Coal based Steam Generation Plant
o Back pressure type Turbo Generator for co-generation of powerBASIC REACTIONS Digestion reaction :
Al(OH)3 + NaOH NaAl(OH)4
Silica Dissolution :
Al2O3, 2SiO2, 2H2O + 6NaOH 2NaAl(OH)4 + 2Na2SiO3 + H2O
Desilication Reaction :
6NaAl(OH)4 + 6 Na2SiO3 3(Na2O,Al2O3,2SiO2,2H2O),Na2X + 12NaOH
Where X = CO3-2, 2AlO2
-, 2OH-, 2Cl-, SO3-2 etc. or a mixture of these anions
Precipitation reaction :
NaAl(OH)4 Al(OH)3 + NaOH
Carbonation reaction :
2NaOH + CO2 Na2CO3 + H2O
Causticisation reaction :
Na2CO3 + Ca(OH)2 CaCO3 + 2 NaOH
BAUXITE QUALITY (%) – Original designed
o Al2O3 (t) - 44.60
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o ATH - 40.80
o SiO2 (t) - 2.30
o SiO2 (r) - 1.65
o Fe2O3 - 25.40
o LOI - 23.40
PRODUCT QUALITYCalcined Alumna - Metallurgical grade Sandy Alumna
o Physical Properties BET - 60 – 80 m2/gm LOI (300-1000oC) - 0.5 – 1.0 % Bulk Density - 0.95 – 1.05 T/m3
Alpha Content - 10 % (max) Grain Size Typical Max
-45 mic 10% 12 %+125 mic 15 %
o Chemical Properties P2O5 - 0.002 % (max) Na2O - 0.50 % (max) Fe2O3 - 0.015 % (max) SiO2 - 0.02 % (max) ZnO - 0.0008 % (max) CaO - 0.05 % (max) TiO2 - 0.004 % (max) V2O5 - 0.002 % (max) K2O - 0.002 % (max) Ga2O3 - 0.012 % (max) Alumina - 98.5 % (min)
LIST OF RAW MATERIALS
o Bauxite - Own Captive Mines
o Caustic Soda - Imported and Indigenous
o Lime - VSP/ RST/ Katni Area
o Wheat Bran - Local Flour Mills
o Coal - MCL Talchet, IB Valley
o Fuel Oil (HFO / LDO) - IOCL / HPCL
o Cytec - Cytec, Australia
o CGM - Ondeo Nalco Chemicals, Kolkota
o Alclar 661 - CIBA Speciality Chemicals
BAUXITE HANDLING AREA:
o ROM (Run-off Mines) Bauxite, primary crushing done at Mines to d80=150 mm
o Received at Angle Station for (i) Stacking or (ii) Direct feeding
o Stacking of Bauxite done by a Stacker in any of the 4 piles.
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o Pile capacity - 1,65,000 MT each
o Bucket wheel Reclaimers
o Two lines of Reclaiming Old - 700 T/Hr
New - 1000 T/Hr
o Screening and secondary Crushing to d80=30 mm
o 4 day Silos - 2200 MT capacity eachGRINDING:
o Total 4 Ball Mills 3 old and 1 New
o Old Mills
Original design New Working conditionCapacity 155 TPH 207 TPH-63 mic, % > 80 > 78Bond Index 12.3 7.30KW 1600 KWBall Load 120 MT
o New MillCapacity 225 TPH-63 mic, % > 78KW 2000 KWBall Load 120 MT
o Wet Grinding with SL at feed end / discharge end
o Speed - 14.73 rpm (72% of critical speed)
o Hydocyclone - 3 cyclones per cluster
o Output slurry to predesilicationPRE-DESILICATION
o Silica dissolves in heating tank, mechanically agitated
o Direct Steam injection
o 4 predesilication tanks per stream, mechanically agitated
o Slurry transfer by VFD pumps with level control
o Residence time of 6 – 8 Hrs, 93 % silica removed
o Injection of Green liquor at outlet of predesilication
o Dilution for Hydrocyclone : Classification and raising of concentration (Na2O) fordigestion
o Output : H/c underflow to Ball Mill and Overflow to digestion.DIGESTION:
o 6 nos of tanks per stream, 5 working and one standby, mechanically agitated
o First 4 tanks with steam heating coil for indirect heating
o Temperature control in 2nd / 3rd tank in operation with two steam c/v and flow meters(105 – 107oC )
o Condensate collected and returned to boiler house ensuring quality ie conductivity
o Slurry transfer from tank to tank by gravity flow and plunger system.
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o From last operating tank slurry pumping to sand separation by hydraulic couplingpump.
o Online RP measurement at the outlet of digesters.
o Every 2 hour RP analysis at lab for control of GL flow/ Bauxite
o Secondary GL addition in 1st digester
o Target RP : 1.1
o Steam – 6 ata in Stream II and 9 ata in Stream I and IIISAND SEPARATION & WASHING:
o 5 cyclones for separation of sand/stream, 4 working and 1 standby
o Sand is coarse undigested Bauxite
o Sand washing in 3 stages in Cyclone system and counter current flow
o Sand wash using RMP water or Sodic Condensate
o Final washed sand (3rd stage u/f) to mud disposal tank and 1st stage o/f to dilution tank
DILUTION:
o Dilution is to reduce the soda concentration from 183 gpl to 167 gpl.
o Reduction in concentration to facilitate desilication in post desilication.
o Dilution by a part of W1 o/f
o Slurry transfer to post desilication by Hydraulic coupling pumpsPOST DESILICATION:
o 5 mechanically agitated tanks, 3-4 working, 2-1 stand by
o Heating arrangement in 1st or 2nd tanks
o Temperature 105oC
o Steam Condensate collected and Send to Power plant ensuring quality
o Residence time 6-8 hrs
o Post desilicated slurry to settlers
SETTLING:
o 7 nos Flat Botom Settlers
o 40 m dia and 6.25m height
o 2 nos operating in each stream and one standby for all three streams
o Fitted with rake mechanism for outward pushing the mud
o Single point mud evacuation
o Fitted with rake drive system ( 3 drives)
o Torque rating 2,02,500 Kgm
o Collection of SOF by gravity in SOF tank
o Solid gpl in O/F – 1 gpl max
o Sellter U/f solid gpl - 500 – 600 gpl
o Settling aid - Flocculant Cytec HX-401 or 400
o Flocculant concentration - 0.2 % solution
o Settler O/F to Kelly Filter feed tank with Hydraulic coupling pumps
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o Settler u/f to 1st washer with VFD pumps
o Motorised s/v and discharge v/v for SOF pumps and SUF pumps
MUD WASHING:
o 6 stages of washing before TTD in each stream, hydro mixer in each stream
o Rake mechanism like settler, 2 drive system, torque rating 60000 kgm
o Counter current washing
o Mud wash water at TTD Hydro mixer
o 1st washer o/f to Dilution (primary) after sand separation
o Dilution (secondary) at SOF tank
o Flocculant- Bran, facilities of HX-401 in W1 only.
o U/f pumps are having VFD
o Overflow pumps are having VFD or Hydraulic couplings
o U/f of 6th washers of stream- I/II to mud disposal tank of stream 1/II
o Mud along with sand of stream I and II from mud disposal tank to mud disposal tank ofstream III
o 6th washer mud of stream III to mud disposal tank of stream III.
o 3 streams mud and sand slurry fed to TTD
o TTD Thickener – 20m dia x 20 m height (approx), conic bottom, cylindrical height 8 m(approx)
o Cone bottom, mud discharge with VFD pumps from compaction zone.
o Mud supply to Geho pump suction
o Geho pump - 82 Kg / 78 Kg discharge, 264 – 312 m3/ hr52 – 58 % solid discharge to RMP through 6.4 km piping.
o Flocculant - Powder flocculent ( Alclar 661/662) prepared with sodic condensate– 0.2 % solution.
FLOCCULATION & CAUSTICISATION
o Flocculants - Cytec HX 401, Wheat Bran , Alclar 661
Cytec HX 401 - In Settler and washer-1
Preparation Unit, storage of 2% solution, dosing of 0.2 % solution
Bran - In Washers
Preparation with W1O/f, screening, storing,dosing
Alclar 661 - Preparation using Sodic condensate/ TTD o/f /
Treated water , storage of 2% solution, dosing of 0.2% solution
o Causticisation
W3 O/F or W4 O/F
To PHE for raising the temperature
Back to 1st causticiser
4 tanks per stream (no causticisation in stream III)
Direct steam heating
Lime slurry dosing in 1st causticiser
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Temperature 96oC, Residence time 45 minutes – 1 hour
Slurry flow by gravity to settler
Causticised mud to 5th washer
Causticised settler O/f to W3 or W2
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SECURITY FILTRATION:
o Settler O/f input to filter feed tank
o Lime slurry or filter aid addition in filter feed tank
o Individual Kelly filter feed with VFD pump with flow / pressure control
o 6 filters per stream
o Filtration area 400 m2, 21 leaves
o Polypropylene cloth, stitched to bags for fitting into frame
o Filtration cycle – 8 hrs (approx)
o Filter washing with RMP water
o Turbid liquor to settler
o Dump mud to 5th washer
o Filtrate quality – solid less than 30 mgpl
o Filtrate to aluminate liquor tank
o Aluminate liquor pumps – Hydraulic pump
o 3 Aluminate liquor tank having facility to bypass one or two tanks
o Storage facility for lime and was water
o Individual lime dosing facility is not put into regular operation due to too manyproblems.
PLATE HEAT EXCHANGER:
o Aluminate liquor temperature – 100oC (approx)
o Heat recovery by W3 O/f, spent liquor and cooling water if required.
o Target cooling is dependant on precipitation head temperature desired which is fixedobserving nucleation.
o Ne(1.83) is Number of particles of 1.83 micron size in one gram
o Temperature target increases with rise in nucleation
o For stream I and II- 3 lines of PHE, 2 lines in operation and 1 standby
o For stream III – 2 lines of PHE, 1 line in operation, 1 stand by
o Each line- 5 batteries of PHE
o 1st PHE- heat exchange between Aluminate and W3 O/f
o 2nd-4th PHE – heat exchange between Aluminate liquor and SL
o 5th PHE – heat exchange between Aluminate liquor and W3 o/f
o By pass facility of W3 O/F and SL
o For heating up W3 O/F one separate PHE (Causticisation PHE)for heat exchange withSteam.
o CGM dosing to Aluminate liquor at the outlet of PHE
o CGM - 2nd tool to control nucleation.
o Variation of precipitation Head temperature and CGM dosing are the controllingparameters for nucleation.
o CGM helps in agglomeration and cleaning the hydrate surface.
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SEEDING AND HYDRATE FILTRATION;
o Seeding in Seed tank - Aluminate liquor and hydrate from seed filter.
o Seed ratio 9.8
o Seed slurry to 1st precipitator with hydraulic coupling pump.
o Feed to seed filters from last but one precipitator by gravity flow.
o Seed filters are rotary vacuum disc filters.
o Liquor filtrate, Spent liquor to SL (unpolished) Tank
o 5 seed filters per stream in Stream I and II–114 m2 filtration area : 3 discs ( original 4filters and 1 added in the Debottlenecking)
o 4 seed filters of higher capacity in stream III-120 m2 filtration area : 3 discs
o 2 seed slurry pumps in each stream and 3 seed slurry pumps for DB filters of stream Iand II.
o Filter O/f slurry to O/f tank and recycling to precipitator
o Each filter is associated with one vacuum pump and one blower.
o Filtration rate – 3.0 m3/m2/hr (GF) ; 4.0 m3/m2/hr(DO) and 4.5m3/m2/hr (Bokela)
o Filter cloth – Non-woven polypropylene clothSL POLISHING:
o Unpolished SL - 3 to 4 gpl solid
o Solid separation by cyclone
o 7 cluster of cyclones in each stream, 5 operating and 2 standby
o Each cluster 12 cyclones
o Cyclone O/f – 0.5 gpl solid
o Cyclone O/F to polished spent liquor tank
o SL to PHE from polished SL tank
o Cyclone U/f to O/f and drainage tank and recycled to last but one precipitator by O/Fand drainage pump.
PRECIPITATION & INTER STAGE COOLING:
o 16 nos of precipitator in each stream, 14 nos working and 2 standby
o 14 m dia x 30 mtr height , Mechanically agitated
o Flow by gravity with plunger and launder gate arrangement
o From last precipitator slurry is recycled to last but one precipitator.
o For production / drawl of hydrate slurry to production side – part of slurry from lastbut two precipitator.
o For recirculation of precipitated slurry, drainage pump facility is available.
o Same drainage pump is used for emptying out precipitators.
o 5 nos of Inter state coolers in each stream, 4 working, 1 standby
o coolers are associated with 5th to 9th precipitator.
o 1/3rd of total slurry is cooled in each stage, with a temperature drop of 6- 8 oC.
o Cooling media is cooling water
o Overall impact on end temperature of precipitator to 52 – 54 oC.
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o Interstage cooling is to enhance productivity.
HYDRATE CLASSIFICATION:
o Slurry drawn from last but two precipitator
o Feed dilution with spent liquor
o Feed pump – VFD drive for cyclone feed pressure control and feed density control
o Facilities for two stage classification in each stream for fine granulometry situation
o Normal classification with 1st stage only
o 1st stage cyclone – 1 cluster with 80 nos of cyclones.
o 2nd stage cyclone – 1 cluster with 40 nos of cyclones
o U/f dilution with spent liquor
o During two stage operation, u/f dilution is more for controlling feed density of 2nd
stage.
o O/f is recycled back to last but one precuipitator, directly by gravity
o O/f of 2nd stage recycled back to last but one precipitator via O/f and drainage tank.
o Classification is to take coarser hydrate to product side
o U/f of classification to classifier u/f tank.
1 ST STAGE PRODUCT FILTRATION:
o Classified hydrate slurry is filtered to get 1st stage product hydrate
o 2 disc, rotary vacuum disc filters are used for filtration
o One filter per stream
o Each filter is able to handle slightly less than 2 streams slurry
o Wash filtrate of 2nd stage filtration is used for re pulping 1st stage hydrate
o Filtrate from 1st stage product filter get mixed with spent liquor.
o Filter o/f to classified slurry u/f tank
o Filtration area is 76 m2/ 80 m2
o Re pulped slurry is fed to 2nd stage filtration unit.2 nd STAGE FILTRATION UNIT
o Filtration of 1st stage product slurry, washing of hydrate to get product hydrate forstoring or Calcination.
o Rotary vacuum drum filters are used.
o 4 nos of drum filter, each associated with vacuum pump, blower , feed pump andconveying system.
o Normally 3 in operation and 1 standby.
o Filter 22 - Cal- A or storage
o Filter 23 - Cal- A or B or storage
o Filter 24 - Cal- B or C or storage
o Filter 713 (25) - Cal- C or storage
o Hydrate washing by hot sodic condensate
o Main filtrate is known as 2nd stage filtrate
o Filtrate generated during washing and drying is known as wash filtrate.
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o Wash filtrate is used for re-pulping 1st stage product.
o Hydrate produced will have moisture less than 8% (max) and Na2O(s) less than 0.03 %.
STABILISATION LIQUOR CYCLONE:
o 2nd stage filtrate is having 2-3 gpl soild.
o Solid separation by cyclones.
o One cluster of 20 cyclones.
o Cyclones u/f to filter feed tank.
o Cyclones o/f is having less than 0.5 gpl solid.
o This is known as stabilization liquor . this is rich in impurities (oxalate).
o Stabilization liquor to W3 o/f receptacle , which is used for causticisation.HYDRATE STORAGE AND MIXING:
o Hydrate storage for storing hydrate during annual S/D of Calciners or any problemwith calciners.
o Sale of hydrate is from stored hydrate .
o Storage capacity is 35,000 MT as Al2O3 each.
o Reclaiming facility by pay loader and mixing in a agitated tank with wash filtrate.
o Hydrate slurry to 2nd stage filtration unit for using after filtration at calciners.
o 2 storage and 2 nos of mixing line is provided.CALCINATION:
o calcination is to remove all moistures associated with hydrate and to get productsuitable for smelting.
o Removal of surface moisture & bound moisture.
o Calcinations to maintain LOI, BET and -Alumina .
o Calcinations temperatures 950-1000 deg C
o Fluidized bed static calciner
o Supplied by M/s Lurgi, GMBH.
o Original 2 calciners –1400 MTPD
o Debottlenecking –upgradation to 1700 MTPD
o Expansion –1 no. 2000 MTPD
o Fuel –heavy fuel oil
o Energy efficient –735 Kcal/Kg, reduction of 5% , with PTS at full capacity.
–695 Kcal/Kg for new calciners.
o Major component –Blowers, Feed screw, ESP Screw Conveyor, ESP, Furnace,Material feed cyclone, Recycling cyclone, Sealpot, Cooling Cyclone, Fluid Bed cooler, Air slide,Air lift, Conveying Cyclone, PA Coils, Bubblecaps etc.
ALUMINA HANDLING SYSTEM:
o Receiving fresh alumna from Calciners, Conveying, Storing in Silos, Loading Wagons,Bagging.
o 2 main conveyors - 260 TPH Capacity
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o Air Slides for filling alumna silos.
o 3 silos, 12000 MT capacity each.
o Diversion facilities for bagging plant hopper.
o Fluidization facilities for silo.
o Automatic spotting & loading of specially designed wagons.
o 13 rakes of BTAP wagons, 48 wagons in each rake on run.
o All wagons are captive.
CAUSTIC SODA HANDLING & STORAGE:
o Procurement of indigenous & imported both.
o Receipt of caustic soda lye (min. 47% NaOH).
o Receipt of tankers from nearby suppliers, unloading by gravity to storage tank.
o Transportation from Vizag by 3 28 No.s captive wagons.
o Unloading facility- by vacuum system and siphoning from top of wagons.
o Transfer from unloading station to storage tank by pumps.
o 3 No.s storage tanks 21 m dia 14 m height, capacity 3000 MT NaOH (100%) approx.
o Caustic transfer pumps for different points (08/05/06/07/09).
o Fuel oil handling & storage.
o Supplier IOCL, HPCL.
o Normally from Vizag.
o Transportation by Railway wagon & Nalco’s captive wagon (28 nos).
o Unloading facility – with bottom unloading
o Unloading header – transportation to storage by multiple units.
o 3 nos of storage tanks – 2 Nos old tank 14 m dia 14 m ht , 2000KL Cap–1 no. new tk., 24 m dia 14 m height , 6000KL.
o Oil transfer to SPP & Calcination day tanks by pumpLIME HANDLING & STORAGE AND SLAKING:
o Truck unloading station available.
o Receipt of lime in 50 Kg bags.
o No facility for wagon unloading.
o Alumna bagging plant and cement godowns are used for lime bag stockyard for wagonunloading.
o Transportation by truck to unloading station.
o Lime bunkers, conveyors for feeding to crushers and bucket elevators for filling to silosthrough a shuttle conveyor.
o 2 silos of 1000 T capacity each.
o Lime drawl from silo bottom through table feeder to slacker.
o Slaking – formation of Ca(OH)2, Slaker capacity 8 TPH.
o Rake classifier at the outlet of slakers.
o Slaked lime slurry storage tank & transfer to mini 04 & 05 area by pumps.
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o Density of lime slurry is measured online.
OXALATE REMOVAL UNIT:
o Oxalate is separated out from green liquor.
o Green liquor cooling in PHE & cooling water.
o Lime drawn form silo of lime handling unit crushed and added to cold green liquor.
o Oxalate get precipitated on the surface of lime.
o Oxalate mud is separated in (AMA Filter).
o De-oxalated liquor is heated up with heat of incoming GL.
o Hot de-oxalated liquor to evaporation.EVAPORATION:
o Evaporation of spent liquor to get concentrated green liquor required for digestion.
o 6 nos of batteries, each with 6 effects.
o All are backward flow, falling film type evaporators.
o Facilities to bypass any one of first 3 effects.
o SL fed in the 5th & 6th effect.
o Steam in 1st or 1st and 2nd effect or 2nd effect.
o Possible combination
- 6 effects 6 bodies- 5 effects 6 bodies- 5 effects 5 bodies
o To take advantage of steam economy/ capacity and maintenance requirement.
o Capacity / Economy- 135, 3.25- 175, 3.15- 155, 2.95
o 1st effect condensate – pure steam condensate
o 2nd effect condensate –Vapour condensate Capacity – 10/7mic
o 5th effect condensate –sodic condensate
o Vacuum by steam ejector.
o 4 SL tanks, 4 GL tanks for storage (2 nos for Stream I/II and 2 nos for Stream III)
o 2 nos Sodic condensate tank.
o 1 no mud wash water tank and 1 no Wash water tank.
o Facilities for transfer of SL/ GL from Stream-I/II to stream-III or vice versa.
o SL pumps for each battery feed, each Ball Mill(one standby in stream-III)
o Primary GL pumps 3 nos for Stream –I/II and 2 nos for Stream –III.
o Secondary GL pumps 3 nos for Stream – I/II and 2 nos for Stream-III.
o 2 nos Sodic Condensate Pump.(1 operating + 1 standby) for Drum filter.
o 2 nos Sodic Condensate Pump(Sand separation, Lime slaking, CT-1) –1 W+1 SB
o 2 nos Sodic Condensate Pump(Cytec, Seed Filters, CT-4, CT-2)–1W+ 1 SB.
o 3 No.s mud wash water Pump to supply mud wash water to TTD (2 W+ 1 SB).
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o Concentrated H2SO4 tank, dilute tank, transfer pump for acid cleaning of evaporators.
COMPRESSOR & COOLING TOWER:
o 4 nos of KG Khosla Compressor –55Nm3/min cap.
o 2nos of Atlas Copco Screw Compressor –80 Nm3/min cap.
o 2nos of ELLIOT Centrifugal Compressor – 80 Nm3/min cap.
o 2nos old air driers of 30 Nm3/min capacity (air purge type) – for instrumentation air.
o 1no. old air drier of 15 Nm3/min capacity (air purge type) for dry process air.
o 1no. of rotary air drier associated with Atlas Copco for instrument air of 80 Nm3/mincap.
o 1 no. Sahara drier (air purge type ) 80 Nm3/min cap. For instrument air associated withcentrifugal Compressor.
o Plant Air, Instrument air (- 400C ), Dry Process Air(-50C)
o CT-1 – 4 cells 2200 m3/h - for 6 batteries.
o CT-2 – 3 cells 2000 m3/h (2 W+ 1 SB) – for compressors, hydraulic Couplingpumps and Air conditioners.
o CT-4 – 5 cells 1400 m3/h (2 nos for ISC , 2 for Vacuum Pumps, Blowers,PHEs and one common std-by).
WASTE WATER TREATMENT PLANT:
o Alkali Effluent Pond (From all process areas).
o Acid Waste Water Treatment Plant(acid waste from 06/08, Laboratory Waste, Coolingtower blow down).
o Sanitary Waste water Treatment Plant.
o Oily Waste water Treatment Plant(not operated since inception)
o Environmental clearance – Ash Pond overflow 100 m3/h.
o Presently acid waste water / sanitary waste water to alkali pond via guard pond andrecycled back to mud washing circuit.
RED MUD POND:
o Hazardous Water as per earlier rules, Caustic Soda Presence.
o Expected life upto 2012 with TTD discharge.
o Water reclamation facility.
o Dam Height – 945 m , Present water level 942.8 m
o Free board level permitted 943.5 m.
STEAM & POWER PLANT:
o Co-generation
o 4 Boilers , 200 TPH capacity, 68 ata ( 3W+1 SB).
o 3 TGs , 18.5 MW Capacity, 1 no. dump condenser (120 TPH)
o 1 Cooling tower.
o DM plant 3 90 m3/h Capacity
o Coal Handling Plant
o Ash Disposal System
o Ash Pond
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o Supply steam to Process – 9 ata & 6 ata, 180 – 1200C
Location 6 ataPer T
9 ataPer T
Per hr. for normal load (195 TPH)
Remarks
Predesilication 183 Kg - 35.685 TPH
2.285T/T
Digestion 454 Kg 466 Kg 90.090 TPHPost desilication 154 Kg 106 Kg 20.540 TPHEvaporation 1141 Kg - 222.495 TPHCausticisation - 210 Kg 40.950 TPHPrecipitation Cleaning - 69 Kg 13.455 TPHCCL - 38 Kg 7.410 TPHMisc. + Loss - 77 Kg 15.015 TPHTotal 415.64 TPHThis excludes dumped steam and internal consumption at SPP.
LOCATION 2008-09 2009-10(till Sept.)T/T TPH T/T TPH
Evapoartion 1.304 245.245 1.342 248.797Predesilication 0.216 40.632 0.216 40.045Digestion 0.354 66.577 0.370 68.595Post desilication 0.134 25.202 0.159 29.477Steam through 105 (Causticisation , CCL) 0.070 13.165 0.071 13.163Steam through 110 (Causticisation PHE ,Precipitation)
0.095 17.866 0.094 17.427
Total Accounted 2.194 408.678 2.252 417.504Dumped steam 0.030 5.642 0.111 20.579SPP internal 0.370 69.587 0.373 69.151Unaccounted 0.291 54.729 0.300 55.618Total 2.864 538.636 3.035 562.852
ENERGY CONSUMPTION IN ALUMINA PLANT:
For Hydrate Circuit, design Power consumption is 188 KWH/T
As per MOU, Total Power Consumption is 355 KWH/T
Actual figures achieved for 2008-09 and 2009-10 (Till September) is given
here below.
Year/Area2008-09 2009-10 (Till Sept)
MW KWH/T MW KWH/T
Hydrate Circuit 32.04 187.54 30.45 180.87
Calciner Circuit 4.56 26.98 4.47 26.75
SPP 14.15 82.93 14.57 86.56
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Utilities(IncludingTownship)
7.83 45.82 9.08 53.93
TOTAL 58.58 343.27 58.57 348.11
CHAPTER –VII
CONCLUSION / SUMMARY &SUGGESTIONS
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CONCLUSION
The company registered a highly satisfactory performance during the year as
well as during the last year under review. The project is done based on the annual
reports of 2008-09, 2009-10 and the unaudited partial data of profit & loss account
and balance sheet of 2010-11, because so far the annual report of 2010-11 is not yet
published. The demand and price scenario in the international market for aluminium
and alumina is highly volatile. The company is registered with the London Metal
Exchange (LME). NALCO being the first company in India who has decided to link
its domestic prices of aluminium and alumina to that of LME prices since
November/December 1994. This has facilitated better average realization per tonne
besides helped in reducing inventory carrying costs.
NALCO has also closed the financial year 2010-11 with a record sales
turnover of Rs. 4439.99 Crores, registering an increase of 32.49% over the previous
year. As per the unaudited statement of accounts taken as record by Board of
Directors the Profit Before Tax (PBT) has increased by 77% in 2010-11. The net
profit turnover has been Rs. 1234.84 Crores after providing Rs. 635.43 crore for tax
compared to the net profit of Rs. 737.34 Crores in the previous year. The company has
achieved a significant reduction in its interest burden from Rs. 103.41 Crores in 2009-
10 to Rs. 60.61 Crores in 2010-11 due to substantial repayment of overseas loans. It is
noteworthy that the company has succeeded in prepaying Rs. 627.64 Crores overseas
loan between March’04 to March’05. The book value per share has also improved to
Rs. 72.91 from Rs. 58.31 in the previous year, while the Earning per share (EPS) has
been Rs. 19.17. On the export front the company has boosted an all time record
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earning of Rs. 2200.25 crore compared to Rs. 1717.27 crore in the previous year
which is 49% of the total turnover.
On the production, NALCO has achieved remarkable success by exceeding all
the annual targets. At mines the company exceeded its rated capacity of 48 lakh
tonnes with record production of 48.51 lakh tonnes of Bauxite beating the previous
best of 48.16 lakh tonnes achieved in 2009-10. Alumina production at the refinery has
record crossing the rated capacity of 15.75 lakh tonnes whereas 15.50 lakh tonnes
could be produced last year. This year it has gone up to 15.66 lakh tonnes. Also the
15.755 lakh tonne aluminium production at the smelter plant this year is on all time
high achievement registering an increase of 1% over the previous year. At the Captive
Power Plant (CPP) a net generation of 5613 million units of power has surpassed the
previous best of 5122 million units achieved last year.
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CHAPTER –VIII
ANNEXURE
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BIBLIOGRAPHY
Sharma and Gupta, Management Accounting, Kalyani Publisher.
Pandey.I.M, Financial Management, Vikas Publishing.
Kahn.M.Y and Jain.P.K, Financial Management, Tata McGraw.
HILL Publishing.
http://www.Nalco-india.com.
http://www.google.com.
23rd and 24th Annual report of Nalco.
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PROFIT AND LOSS ACCOUNT(for the year ended March 31, 2013)
(Rs. In Crores)
Particulars ParticularsTo Raw material consumedTo Power and fuelTo Repair and MaintenanceTo Other Manufacturing ExpensesTo Employee Remuneration BenefitsTo Gross Profit c/d
408.92 642.63 166.47 95.12 258.42
1558.43
By Gross Sales Less Excise DutyNet SalesBy Stock of Finished internally consumedBy Accretion to stock
3338.87 224.50
3114.37
5.97 9.65
3129.99 3129.99To Administrative ExpensesTo Other ExpensesTo Selling & Distribution ExpensesTo DepreciationTo Deferred Revenue ExpenditureTo Net Profit c/d (EBIT)
67.50 14.10 71.14
445.13 1.14
1156.17
By Gross Profit b/dBy Other IncomeBy Old Provision Less New Provision
2.65 0.70
1558.43 194.80
1.95
1755.18 1755.18
Earning Before Interest & Taxes (EBIT)Less InterestProfit Before Tax (PBT)Less TaxProfit After Tax (PAT)(Profit available to Equity Share Holders)
1156.17 103.411052.70 315.39 737.37
Profit After Tax (PAT)Add Previous year profit brought forwardAdd Profit transferred to Capital Reserve brought backAdd Profit transferred to Debenture Redemption Fund broughtback
737.37 3.15 0.05 106.97
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Amount available for appropriations Less Appropriations:Proposed Final DividendTax on DividendTransfer to General Reserve
Profit Transfer to Balance Sheet
847.54
257.72 33.02 550.00
6.08
Earning Per Share (EPS) (737.37 Crores/64,43,09,628 shares)(PAT/Number of shares)
11.44
BALANCE SHEET OF NALCO(as on March 31, 2013)
(Rs. In Crores)
Liability AssetsShareholder’s Fund:Share CapitalReserve & SurplusLoan Fund:Secured FundDeferred Tax Liability Current Liability &Provisions:LiabilitiesProvisions
547.88316.40
644.313112.36
654.39 609.99
864.28
Fixed Assets:Gross BlockLess DepreciationNet BlockCapital Work in ProgressInvestmentsCurrent Assets, Loans & Advances:InventoriesSundry DebtorCash & Bank BalanceOther Current AssetsLoans & Advances
8092.874189.39
4694.82 200.00
990.51
3903.48 791.34
480.48 102.24 98.36 86.51 222.92
5885.33 5885.33
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PROFIT AND LOSS ACCOUNT(for the year ended March 31, 2013)
(Rs. In Crores)
Particulars ParticularsTo Raw material consumedTo Power and fuelTo Repair and MantenanceTo Other Manufacturing ExpensesTo Employee Remuneration BenefitsTo Gross Profit c/d
444.24 760.46 164.34 113.00 289.42
2393.84
By Gross Sales Less Excise DutyNet SalesBy Stock of Finished internally consumedBy Accretion to stock
4439.99 316.03
4123.96
15.43 25.91
4165.30 4165.30To Administrative ExpensesTo Other ExpensesTo Selling & Distribution ExpensesTo DepreciationTo Old Provision Less New Provision
To Deferred Revenue ExpenditureTo Net Profit c/d (EBIT)
5.493.30
79.10 57.32 100.85
58.24
2.19 461.08
1870.27
By Gross Profit b/dBy Other Income 2393.84
235.21
2629.05 2629.05
Earning Before Interest & Taxes (EBIT)Less InterestProfit Before Tax (PBT)Less TaxProfit After Tax (PAT)(Profit available to Equity Share Holders)
1870.27 ------1870.27 635.431234.84
Profit After Tax (PAT)Add Previous year profit brought forwardAdd Profit transferred to Capital Reserve brought backAdd Profit transferred to Debenture Redemption Fund brought back
1234.84 6.80 0.05 217.19
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Amount available for appropriations Less Appropriations:Interim DividendProposed Final DividendTax on DividendTransfer to General ReserveProfit Transfer to Balance Sheet
1458.88
128.86 128.86 35.581150.00 15.58
Earning Per Share (EPS) (1234.84 Crores/64,43,09,628 shares)(PAT/Number of shares)
19.17
BALANCE SHEET OF NALCO(as on March 31, 2013)
(Rs. In Crores)
Liability AssetsShareholder’s Fund:Share CapitalReserve & SurplusLoan Fund:Secured FundDeferred Tax Liability Current Liability &Provisions:LiabilitiesProvisions
616.25190.14
644.314053.50
----- 652.45
806.39
Fixed Assets:Gross BlockLess DepreciationNet BlockCapital Work in ProgressInvestmentsCurrent Assets, Loans & Advances:InventoriesSundry DebtorCash & Bank BalanceOther Current AssetsLoans & Advances
8784.554645.55
4345.61 ------
1811.04
4139.00 206.61
529.06 92.81 755.21 82.01 351.95
6156.65 6156.65
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