financial report of nacl

8/8/2019 Financial Report of Nacl

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A

PROJECT REPORT ON

“FINANCIAL REPORT”

NATIONAL ALUMINIUM COMPANY LIMITEDSMELTER PLANT,ANGUL DIVISION

PROJECT SUBMITTED BY

KIRAN BALA PATRA

For the partial fulfillment of the Degree of B.COM(Acct.)

P.N Autonomous college, Khurda

Project Guide Institute Guide

B.K. Dash

B.Padhiary

Senior Manager,Finance

(NALCO) P.N Autonomous College, Khurda



CONTENTS:-

1. CHAPTER-1:INTRODUCTION

a. Introduction.

b. Need for a study.

c. Objectives.

d. Details.

2. CHAPTER-2:General profile of company

General profile

a. Nalco company

b. Origin & history

c. Location of company

d. Nalco product

e. Objective

CHAPTER-3:Finding analysis and interpretation

4. CHAPTER-5:Summary

a. Suggestion

b. Conclusion

c. Bibliography

d. Annexure



Preface

Finance as a subject of study has received wide spread support from both the

academic and business segment people.

The topic “Inventory Management” in National Aluminium Company Limited

was selected as to understand the inventory needs and importance with

special reference to National Aluminium Company Limited ,Angul Division .

As the Inventory Management refers to the administration of all aspect of Raw

material ,Work in progress ,Finished goods and the Spare parts. The mainreason of this study is to know how the organization is managing ,planning

,organizing and controlling the inventory.

Even efforts have been made to collect relevant information about the

topic.The present study of “Inventory Management” in NALCO,Smelter Plant

Angul Division is based in Finance and Stores Department of NALCO.

This training attends me an opportunity to make a study and analyse the

system adopted by the Organization. It enables me to build the practical

knowledge acquired during the class study with practical training received

during my project study.



DECLARATION

I do here by declare that I have under gone by a

project on “FANANCIAL REPORT” under the guidance of Mr. B.k.

Dash,Senior Manager finance ,National Aluminium Company

Limited, Smelter plant division Angul.This report is submitted by

me in partial fulfillment of B.COM(Acct.) cource from P.N

Autonomous College, Khurdha. The report is exclusively prepares

and; conceptualized by me. All the information and, data given

here in this project are as per my fullest knowledge collected

during my study and from the various websites. It has not been

published any where before.

Thanking

you

Date:

Place:

Signature



Acknowledgement

I have pleasure to express my sincere gratitude and appreciation to our

respected Faculty member ,Mr.B.Padhiary for giving me such project of Nationl

aluminium company limited and giving me the opportunity to work under such

a respected organization and to complete such a challenging in my career.

Finally ,I have the pleasure to express my gratitude and appreciation to

Mr.B.K. Dash,senior finance manger Nationl Aluminium Company Limited .For

giving such a challenging and vital project to accomplish. Moreover I am very

thankful to him for the precious advice and guidance given in the context of this summer training project.

KIRAN BALA PATRA



Chapter-1

INTRODUCTION

INTRODUCTION

Finance is the life blood of any business. Inventory Management is

the process of identify the inventory need for the organization like the Raw

material, Work in progress, finished goods and the spare parts for a

organization. What are the techniques used for the inventory management for

the development of the organization like the ABC analysis, XYZ Analysis or the

economic order quantity for the development of the organization.this is also

carried out by establishing different types of relationship among different

items i.e. the inventory conversion period.



NEED FOR STUDY

Inventory management is needed to study to know the better

management of inventory. Inventory is the most important thing for an

industry. Without Inventory there is no place of a company. How much of

inventory is needed for what and what amount of inventory is needed for a

plant or Industries that is the most important thing for a firm.

By inventory management we can know how much of raw material is

required for a plant. Because if we purchase excess amount of raw material

then the working capital is spent. And the money is idle and idle money means

no profit. Working capital is required for the day to day expenses.

We also know about the work-in-progress, finished goods and the

spares. Spares are the necessary thing for a plant. We also know which are

the vital or most important items for a plant and which product in what

amount we also know by the inventory management. So inventory

management is needed for the better management of the raw material to the

finished goods.

OBJECTIVE OF THE STUDY

The project report is prepared considering the following objective:-

(1)The study on profile of National Aluminium Company Limited.

(2)To study the inventory management of NALCO.

(3)To know the technique used by NALCO for inventory management.

(4)To know the current ratio of NALCO.



DETAILS

The data have been collected to classify the tabulation forms,appropriately statistically technique have been used to analyze the data to

derive at meaningful results.

The data has been collected from the primary sources. Separate personal

interviews were made with the staff attached with cash, stores, and account

section. Questionnaire were given to executives of the finance department of

the company with a request to supply data regarding the procedure and

techniques adopted by them for inventory control. Interaction was also held

with the G.M (Finance) in order to supplement the information received. These

data have been analysed with a view to arrive at conclusions by the

management for effective control of inventory.

Further from the various method and technique available for analysis

ratios, percentages and graphs are used for the above study. The data has

been collected from secondary sources like Annual report, journal, monthly

news, letter etc.

LIMITATIONS

The study of the solely depends upon reliability of the data and information

collected from the secondary sources. It is not possible to collect information

on all activities taken over the year, thus the study incorporates on limitations

that are inherent in the available published information.

1. The analysis is both theoretical and mathematical in nature and ignores

management factor like motivations.

2. Time being a constraint; it was not possible to go still deeper into the

topic.



CHAPTER-2

GENERAL PROFILE

OF COMPANY

ABOUT NALCO

INTRODUCTION TO NALCO:-

National Aluminium Company Ltd. is the largest Aluminium Company in

India. Nalco is considered to be turning point in the history of Indian

Aluminium Industry.NALCO was established in 1981 with technology

collaboration of Aluminium refinery of France. Today it is India’s Fore-most

Alumina-Aluminium producer and exporter. It owns and operates the largest

integrated Bauxite –Alumina-Aluminium complex in Asia.

NALCO exported it’s product in January 1988 with a Shipment of 76000

tones of Alumna, since them the company has never look back.

Nalco is the first Indian Company to be registered in London metal

exchange. The Company has also received ISO 9002, OHSAS-18001 COMPANY

and 14001(certified for excellence in environment management) for all its

units viz. mines, Alumina refinery, Aluminium Smelter and Power Plant. Nalco

products are sold in about 30 countries including U.K., U.S.A., France, Norway,

Switzerland, Belgium, Brazil, Russia, Australia, China & Japan.NALCO

,India’s2nd largest Aluminium maker, is an appealing target for any metals

company company anxious to go through acquisition according to industry

analysis.

On Panchapatamali hills of Koraput District in Orissa ,a fully mechanized

open-cast mine of 48,00,000 tpa ,serves feedstock to Alumina.Refinery



located down hill ,through a 14.6 k.m. long single-flight multi-curve cable belt

conveyor.Presently the capacity is being expanded to 63,00,000 tpa.

The Govt. which owns 87% of NALCO plans to sell a 30% stake by next

April through American depository receipts, Global Depository receipts and the

domestic market.

IT is one of the world’s lowest cost producers of aluminium ,has good

quality plants, strong bauxite reserves and capacity for browed field

expansion.

NALCO produced Aluminium for $1025 per tonne ,less than the $1200 per

tonne at ALCON and other big foreign producer’s.

PERFORMANCE HIGHLIGHTS

26th annual report together with the audited account,s for the year ended

31st march 2007. Nalco Has achieved the highest ever income of Rs. 6354

crore ,as against the income of Rs. 5122 crore during the previous year and

also the highest ever profit after tax at Rs. 2381 crore as against Rs. 1562

crore in the previous year ,thus registering a growth of 24% income and of

52% in profit .Nalco has achieved highest ever export earning of Rs.2585

crore. The main contributing factor for increase in the income and the profit is

better sales realization both in domestic and in export markets.

Physical Performance

production Unit 2006-07 2005-06Bauxite MT 46,23,278 48,54,253Alumina

Hydrate

MT 14,75,200 15,90,000

Aluminium MT 3,58,734 3,58,954Electricity(Net

)

MU 5,968 5679

There was drop in production of bauxite in comparison to the previous year

due to unprecedented heavy rainfall near the mines which affected the



meaning operation. The target for production of Alumina could not be

achieved due to technical snag in cooling tower in refinery which has since

been shorted out.

SALES

The system of entering into annual MoU with domestic customers for sell of

Aluminium metal from plant and stockyards by providing benefits and

incentives has helped NALCO achieved a growth of approximately 2.1% of

sales in domestic market over the previous financial year.NALCO signed MoUs

with 118 domestic customers in 2006-07 as compared to 112 customers in

previous year.

sales uni

t

2006-

07

2005-06

Alumina-Export MT 7,73,57

3

8,62,616

Alumina-Hydrate-

domestic

MT 10,920 12,994

Aluminium-Expot MT 93122

2,63,49

4

95,747Aluminium -domestic MT 2,58,09

43,56,61

6

3,53,841

Electricity MU 421 322

Sale of 5374MT special Hydrate and 2,858MT Special Aluminium during the

year are the highest volumes sold surpassing the previous highs of 5,354 MT

AND 1,126 MT respectively set in 2005-06.Nalco has also started export of

rolled products from September ,2006 and a favorable feedback has been

received from the customer.

FINANCE

The summarized financial results as compared to previous year are

furnished below.



Particulars 31.03.200

7

31.03.200

6Net sales 5,940Other income 414Total income 6,354

Gross margin 3,941321

2,811381

Less: interest &

depreciationProfit before tax(PBT) 3,620provision for tax 1,239PROFIT AFTER TAX(PAT) 2,381Appropriation:

(a) general reserves 1,800(b)dividend including

dividend tax

556

Earning per share(in rs.) 36.96

Nalco continued to remain a “zero debt” company for the third consecutive

year. The company has a surplus cash balance of Rs. 3563 crore as on

31.03.2007 which has been placed in short term deposits to finance the

capital expenditure on expansion ,which is under progress.

GROWTH

Expansion:-

The company has embarked on an ambitious growth plan under 2nd phase

expansion project at an estimated cost of Rs. 5,003 crore (at march,2007 price

level)

The present capacity of the various project segments and the capacity after2nd phase expansion is given below.

Project segment present capacity

After 1st phase

Expansion

Capacity after

2nd phase

expansio

n



Bauxite mine 4.8 min TPY 6.3 min TPYAlumina

refinery

1.575 min TPY 2.1 min TPY

Alumina

Smelter

3,45,000 TPY 4,60,000 TPY

Captive power

plant

960 mw 1200mw

The progress of the work has gained momentum and by the end of june ,2007

orders have been placed for 76 packages for refinery ,93 packages for smelter

and 19 packages for cpp involving financial commitments of Rs. 3,305 crore

and actual expenditure is Rs. 891crore upto 30.06.2007.The project is

scheduled for commission in December ,2008.

OBJECTIVE OF NALCO

1. To maximize capacity utilization.

2. To optimize operational efficiency & productivity.

3. To maintain higher international standards of excellence in product

quality, cost efficiency and customer service.

4. To provide a steady growth in business by technology up gradation,

expansion a diversification.

5. To have global presence and earn foreign exchange.

6. To maintain leadership in domestic market.

7. To instill financial discipline at all levels foe achieving cost and

budgetary control, optimize utilization of working capital and effective

cash flow management.

8. To maximize return on investment.

9. To development a strong R & D base and increase businessdevelopment activities.

10. To promote a result oriented organizational ethos and work culture that

empowers employees and helps realization of individual and

organizational goals.



11. To maximize internal Customer's satisfaction.

12. To foster higher standards of health safety and environment friendly

products.

13. To participate in peripheral development of the area.



ALUMINIUM INDUSTRY IN INDIA

Name of

thecompany

Present

capacity (InMT)

1999-

00

2000-

01

2001-

02

2002-

03

2003-

04

NALCO 345000 21263 230516231674244708 298208

BALCO 100000 94352 86670 70095 95485 97269

INDAL 79000 43459 43760 44156 51231 65063

HINDALCO 345000 248930252897263001266837 324134

MALCO 40000 18500 29000 29394 31084 32624

TOTAL 90900061

7940

42650

4

64284

3

63832

0

68934

5

81729

8

60006200

6400

6600

6800

7000

7200

7400

7600

7800

8000

2003-04 2004-05 2005-06 2006-07

East



EXPORT TURNOVER

The Board needs regularly and is responsible for the proper direction and

management of the company. All the directors have access to the advice of

the company secretary, who is responsible to the Board for ensuring that

Board procedures are followed and all the applicable rules and regulations are

compiled with. During the financial year ended March 31st, 2005 ten Board

meetings were held. The maximum time gap between any two Board meeting

was not more than two calendar months.

Nalco Consists Of Five Units

• Bauxite Mines at Pancha Patamali ,Koraput District ,Orissa

• Alumina Refinery at Damanjodi , Koraput District ,Orissa

• Smelter Plant at Angul ,Orissa

• Power plant at Angul ,Orissa

• Port Facility at Bisakhapatnam ,Andhra Pradesh

Products Of Nalco

Product mix of NALCO at this stage Consists of

0

500

1000

1500

2000

2500

3000

2002-03 2003-04 20004-05 2005-06 2006-07



NALCO ProductAluminium Metal

• Ingots

• Sows

• Billets

• Wirerods

• Alloy wire rods

• Cast stripsAlumina & Hydrate

• Calcined Alumina

• Alumina Hydrate

Zeolite-A

Special Products

• Specialty Hydrate/Alumina

(Alumina Chemicals)Rolled Product

• Aluminium Rolled Products

CHAPTER-3:

Finding Analysis And Interpretation

http://www.nalcoindia.com/products/Ingots.asp?BusinessType=

http://www.nalcoindia.com/products/Sowingots.asp?BusinessType=

http://www.nalcoindia.com/products/Billets1.asp?BusinessType=

http://www.nalcoindia.com/products/wirerods.asp?BusinessType=


http://www.nalcoindia.com/products/caststr.asp?BusinessType=

http://www.nalcoindia.com/products/Calciened.asp?BusinessType=

http://www.nalcoindia.com/products/Aluminahydrate.asp?BusinessType=

http://www.nalcoindia.com/products/Zeolite.asp?BusinessType=

http://www.nalcoindia.com/products/Aluinachem.asp?BusinessType=



http://www.nalcoindia.com/ataglance/rolledproduct.htm?BusinessType=

http://www.nalcoindia.com/products/Ingots.asp?BusinessType=

http://www.nalcoindia.com/products/Sowingots.asp?BusinessType=

http://www.nalcoindia.com/products/Billets1.asp?BusinessType=



http://www.nalcoindia.com/products/caststr.asp?BusinessType=

http://www.nalcoindia.com/products/Calciened.asp?BusinessType=

http://www.nalcoindia.com/products/Aluminahydrate.asp?BusinessType=

http://www.nalcoindia.com/products/Zeolite.asp?BusinessType=




http://www.nalcoindia.com/ataglance/rolledproduct.htm?BusinessType=



Inventory Position In NALCO

Inventory Position In NalcoAs 0n 31st march 2007

Item name % Of ITEMUniversal Material 3

Raw material 13

Finished Goods 38

Coal and Fuel 7Stores Spares and Others 39

total 100

Graph showing Inventory Position Of NALCO as on 31st march 2007



Inventory Position Of Smelter Plant As 0n 31st march 2007

Item name % Of ITEMUniversal Material 2Raw material 14Finished Goods 50Coal and Fuel 1Stores Spares and Others 33

Total 100

Graph showing Inventory Position Of Smelter Plant As 0n 31st march

2007



Sales Turnover

Sales Turnover (Rs in crore)

Sales

2002-

2003

2003-

2004

2004-

2005

2005-

2006

2006-

2007

Export 1501 1717 2200 2306 2586

Domestic 1239 1632 2220 3018 3929

Total Sales Turnover 2740 3349 4420 5324 6515

Graph showing Sales Turnover (Rs in Crore)



Expenditure Of NALCO

Expenditure Of NALCO As On 31stMarch

Item name% of Expenditure

Raw Material 20

Power & Fuel 32

Employees Cost 14

Repair & Main. & other ManufacturingExp. 14

Admn.S&D & Other Cost 8

Depreciation 12

Total 100

Graph Showing Expenditure Of NALCO As On 31st March

Raw Material

Pow er & Fuel

Employees Cost

Repair & Main. & other

Manufacturing Exp.

Admn.S&D & Other Cost

Depreciation



Income of NALCO As on 31ST March 2007

Graph Showing The Income Of NALCO

Income

Export

Domestic

others

Item % of Income

Export 41

Domestic 53

Others 6

Total 100



Aluminium (In '000 MTs)

Total2002-2003

2003-2004

2004-2005

2005-2006

2006-2007

Production 245 298 338 359 359

Export 107 130 133 96 93

Domestic Sales 135 167 206 258 263

Graph showing Aluminium (in ‘000 MT s)

Aluminium (in '000 MTs)

0

50

100

150

200

250

300

350

400

2002-

2003

2003-

2004

2004-

2005

2005-

2006

2006-

2007

Production

Export

Domestic Sales



Stocks Of Raw Material (Rs in Crore)

Items

31st

march2004

31st

march2005

31st

march2006

31st

march2007

Caustic Soda 145.83 147.07 208 189.94

C.P.Coke 108.85 168.25 177 174.62

C.T.Pitch 53.1 63.21 63.4 106.7

Aluminium Fluoride 30.94 31.98 36.7 47.53

Lime 9.72 11.67 12.1 14.54

Crystal Growth Modifier 5.75 4.97 5.53 4.91

Purchased Anode 27.41 0 0

others 27.44 17.09 19.1 19.35

Total 409.04 444.24 521 557.59

0

100

200

300

400

500

600

31st March

2004

31St March

2005

31st March

2006

31st March

2007

total

3-D Column 2

3-D Column 3

Raw material is one of the important part of the inventory.Without

adequate quantity of raw materials of a unit can’t run a day .Here in the above

amount of raw materials for 31st march 2004 is409.04 (crs) ,2005 is 444.24

crs,2006 is 521crs and 2007 is 557.59 crs.Here the raw material is increasedwith the same level. Which suggest an in inadequate method of material issue

and the materials purchased without requirement.



STOCKS OF FINISHED AND INTERMEDIATARY GOODS(Rs in crore)

0

50

100

150

200

250

31st march 2004 31st march 2005 31st march 2006 31st march 2007

t

Interpretation

Work-in progress and finished goods are another part of the inventory.

Work-in-progress inventories are semi manufactured products. Here in the

above amount of work in progress and finished goods for 31st march 2004 is

143.86(crs) ,2005 is 166.63 crs,2006 is 234.98crs and 2007 is 246.60 crs.Here

the work in progress and finished goods are increased in a same manner.

Items

31stmarch2004

31stmarch2005

31st march2006

31stmarch2007

Calcinated Alumina 37.24 32.81 11.16 16.09

Special Grade Alumina 0 0.03 0.04 0.04

Aluminium Standard & Sow ingots 11.47 8.42 0.16 0.09

Aluminium Wire Rods 0.56 1.11 46.98 43.93

Aluminium Billets 0.42 1.89 1.13 0.11

Aluminium Strips 1.52 4.06 30.77 27.29

Rolled Products 0.02 0.04 10.2 14.02

INTRMEDIARY Products

Anodes 34.4 53 55.58 71.03

Anode Butts 0.47 0.59 2.12 1.46

Aluminium Scarps 4.54 4.58 6.51 0.84

Work in progress 53.22 60.1 70.33 71.7

Total 143.86 166.63 234.98 246.6



CHAPTER-5SUMMARY

SUGGESTION

CONCLUSION

ANNEXURE

BIBLIOGRAPHY



SUMMARY

Inventory management is the process of identifying the product which

is must necessary for a plant or firm. And which product is stored how much

and how much of money is spend for purchasing those items. As the primary

objective is to know how to mange the inventory in the plant. Working capital

of a concern is directly concern with the sales. The current assets like debtors,

bills receivables, cash,stock,etc. change with the increase or decrease in sales.

From the Balance Sheet we also know about the current assets and

the current Liabilities. We also analyses the current Ratio.By the inventory

management we can analyse the inventory of a product.

SUGGESTION

The ratio of the company of NALCO is high which indicate high

liquidity of NALCO but at the same time current asset return is less

than fixed assets .So NALCO should reduced the investing in current

assets and being down the current ratio.

Being a old player in the Aluminium sector NALCO sales are less

than the Balco and Hindalco so it should take necessary steps to

over come this competition and increase its both export and

domestic sales.

NALCO should under take some sales promotion activities to

increase its export sales because with compare 2003-04 to 2006-07

the export sales especially for Aluminium is come down.



CONCLUSION

Inventory management is a sensitive area in the field of financial

management. It is the nerve of financial management.

Inventory management is the most vital activity of any

organization. It is a very often noticed that so called profitable companies

have gone out of business due to inefficient management of inventory.

Thus a company should maintain a sound inventory position and

these should be optimum investment in inventory. To get benefit ,itsnecessary to manage inventory in best possible way.

Inventory management includes forecasting of future demand of

the finished products as raw materials, stores and spares, etc.

This study indicates that NALCO’s investment in inventory is

very high and the liquidity position is very low ,as NALCO is growing

organization and for improving in faster in the present business

environment, it should be using more improved technique for inventory

management and maintain a necessary level of inventory.

Since ,now a days the problem of inventory management has

acquired special importance in India,we hope for NALCO that the time will

come when the company,NALCO will show the excellency in management

of inventory among all the India public sectors.

Nalco is remain a “zero debt” company for the 3 rd consecutive

year.NALCO utilized its internal cash generation to meet its working

capital requirement and it had not utilized any working capital borrowing



facility during the year .NALCO has got the navaratna as it maintains the

high quality of management.

In 2006-07 there was drop in production of bauxite in

comparison to the previous year due to unprecedented heavy rainfall near

the mines which affected the mining operation. The target of production

of alumina could not be achieved due to technical snag in cooling tower in

refinery which has since been sorted out.

BIBLIOGRAPHY

1) Financial Management by :I.M. Pandey

2) Financial Management by :M.Y. Khan & P.K. Jain

WEBSITE:

• www.nalco.com

http://www.nalco.com/

http://www.nalco.com/



S W O T A N A L Y S I S O F N A L C O

SWOT Analysis of NALCO identifies Strength and Weakness and relates them with

forward looking opportunities and threats.

STRENGTH• Modern Technology.

• High Quality Product.

• Energetic Human Resource (HR).

• IT Friendly Culture.

WEAKNESS• Risk Adverse (Aging).

• Procedural and Bureaucratic.

• Limited Product Mix.

• ‘Disengaged’ HR.

OPPORTUNITIES

• Scope for increased in Aluminum consumption in India.

• New application areas of various Value Added Products.

• Joint Ventures both in India and Abroad.

• Technological Collaboration for R&D.

THREATS

• Competition from substitute materials.

• Fluctuations in LME prices.

• Reduction in Aluminum import tariffs.



BY

financial report of nacl

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