‘This state govt is pro-active’
Hot Seat - TK Chand CMD, Nalco
- Published 19.09.15
• Last week, you had led a delegation of aluminium industry leaders to New Delhi and had met finance minister Arun Jaitley. What transpired there?
We met the finance minister and presented him the case of how the aluminium industry is witnessing a slump. Earlier, the aluminium industry was meeting 60 per cent of the domestic requirement of the metal, but now it has come down to 44 per cent. We are facing a tough competition from China. But here the energy tariff is quite high compared to other countries. There is also the issue of green tax. Sometimes, even our production cost turns out to be higher than the landing cost of their products in India. Even in one tonne of aluminium, the difference between the cost of production and the landing cost of imported stuff is Rs 6,000 per tonne. The customs duty on metal products should be enhanced to 15 per cent, so that cheap imports, particularly from China, can be checked to a certain extent. As the government is aiming for inclusive growth, it has assured to look into our demands. We need some safeguards.
• You called on Naveen Patnaik after assuming office and also visited the chief minister’s office last week. What issues did you take up with him? Did you get the required support from the state government?
I met the chief minister and presented Nalco’s case, particularly about getting the lease of the Patangi bauxite mines. The Centre has cleared the Patangi bauxite mines, which has a reserve of 75 million tonnes. With our expertise in the field of mining, we are hopeful about mining more through scientific technology. The state should recommend our name and clear all hurdles so that Nalco can get the bauxite mines. The grant of the mining lease has already been delayed by three years.
• Nalco is the pride of the state. Don’t you feel disheartened by the way the state administration is dilly-dallying in recommending the mining lease in favour of Nalco. While you have not got the mining lease for Patangi, you are still operating the Panchpatmali mines on a temporary lease.
That’s not the case. The state government has raised certain points. Their point of argument is that Nalco should invest more under the Corporate Social Responsibility (CSR) scheme than under the normally stipulated fixed guidelines. We have agreed to invest an additional Rs 300 crore in CSR activities, mainly in the plant side and mining areas. We will see that the fruits of progress reach everyone. Once we get the Patangi mines, we will go ahead with putting up a refinery at Damanjodi at a cost of Rs 6,000 crore. We have already earmarked the funds for the project. Once such a huge investment is made in Damanjodi, it will have a chain impact and will give a boost to the local economy.
• Please be frank. Are you not upset with the state government’s attitude?
It is like a family member getting upset with one’s parents. But this time the state government is pro-active and has assured that it will consider our demands through a more positive approach and clear things expeditiously. All should realise that Nalco is totally identified with Odisha. It acts as the brand ambassador of Odisha and has the right to claim all sorts of concession.
• Are you satisfied with the rules and regulations of the state government?
There is always a scope for change and improvement. The rules can be simplified. Sometimes, we notice that good plans and good works we talk about fail to materialise. There are many roadblocks that come on the way. Steps should be taken so that such a situation never arises.
• Recently Nalco got the Utkal-D and E coal blocks. How will it be helpful for Nalco?
Earlier, we had these two coal blocks. But later it was delinked. Now we have got the two coal blocks again. It will help us in expanding our plants. The company’s smooth operation and expansion plans depended mostly on the allocation of these blocks.
• Nalco, one of the Navaratna public sector undertakings (PSUs), is a leading player in the aluminium sector. What’s the future of the aluminium industry?
The Union government has a growth agenda. It has announced that smart cities will come up. Instead of using wood, if we use aluminium for construction, we can save trees and make a city green. In both ways, we will benefit. Besides, the power and the food and beverage sectors are growing fast. While aluminium is an essential component in the power sector, in the food and beverage sector, it will be used for packaging. If we take the cumulative annual growth rate of 11-12 per cent in the coming days, aluminium will be in much demand. Though at present, the aluminium sector is passing through a difficult period, it will overcome this phase and its future is bright.
• But if we take the case of Odisha, we have noticed how Vedanta is struggling to run its plant because of a lack of supply of bauxite. At this point, how can you visualise the state’s future?
There would be a requirement of 10 million tonnes of aluminium by 2020. For making aluminium, we need bauxite. Of the 3.8 billion metric tonnes of bauxite reserve in the country, Odisha has 50 per cent. So, Odisha will play a big role. All the aluminium industries have to come to Odisha. Nalco will certainly play a major role in pioneering the industrialisation.
• Have you any specific plans for Odisha?
We will invest around Rs 35,000 crore in Odisha. Just to tell you, this is not at the conceptual stage. The blueprint has already been made and it is now at the stage of implementation. The money will be invested in putting up a smelter plant, a power plant and to develop the coal blocks that we have got recently. While the smelter plant and power plant will come up in Sundargarh, a new refinery will come up at Damanjodi in Koraput.
• What about overseas plans?
Our first choice is Iran. The Prime Minister has also urged industrialists to consider the case of Iran. It has a friendly attitude towards India. They have promised to make the laws more conducive, and all hurdles will be removed by November. In Iran, we have a plan to set up a gas-based power plant at an investment of 2.2 billion dollars. Being a public sector undertaking, we will be more comfortable in dealing with the Iranian Mineral Development Organisation. In case it does not materialise, our second area of choice will be Oman and then
• Odisha government is insisting on all PSUs setting up medical colleges in the state. Earlier, it had even asked Nalco to establish a medical college. Has any progress been made in this direction?
Instead of Nalco setting up a separate medical college, my idea is that all PSUs should join hands, including the cash-rich Odisha Mining Corporation (OMC), to set up a state-of-the-art medical college in the state. At this point, we have no plans to set up a medical college on our own. But we will invest around Rs 300 crore extra on CSR activities. The state government will suggest how the money will be invested.
• There is a talk of disinvestment in Nalco. What’s your view on this?
There is no more discussion on disinvestments. I have not heard of it recently.
• Some financial experts are baffled with the growth of Nalco. They find its graph rising and falling too often?
I am surprised by such remarks. They have forgotten that Nalco is a zero-debt company. It has its own mine-based strength. Besides, it has 30 years of experience in the aluminium sector. It has a strong brand image. So how can you make such an observation?
• You are a former president of Utkal University (1981). Now you are the CMD of Nalco. How do you feel?
At that time, we had fought for Nalco and struggled to see that the company was set up here. Now, I am the CMD. The role has changed. Now, more responsibility lies with me. I don’t see it as a job only. It is now more of a mission for me.