New Delhi: Aluminium producer Nalco' capital expenditure target has been pruned by 32 percent to Rs 1,181 crore for 2014-15 due to repeated failure of the PSU in meeting targeted expenditure in previous years.
Moreover, National Aluminium Company's (Nalco) capital expenditure target has been cut down by a whopping 69 percent to Rs 542.50 crore for the present fiscal from originally estimated Rs 1,737 crore, the Interim Budget papers for 2014-15 showed.
"Plan outlay is mainly meant for greenfield project and expansion plans, captive coal mine Utkal E, second phase expansion and additions/modification/replacement," it said.
Nalco, the largest domestic aluminium producer, has not been able to meet its capital expenditure targets since 2008-09, an analysis of the Budget and other official papers for last six years showed.
Recently, a Parliamentary Standing Committee on Coal and Steel had also questioned the company and its parent, Ministry of Mines, over the aluminium producer's "miserable" failure in meeting the targets.
Official sources cited host of reasons for Nalco failing to meet the targets, including lack of statutory clearances for company's foray into the nuclear power sector.
In March, 2012, the Bhubaneswar-based company had formed a joint venture with the Nuclear Power Corporation of India for construction of third and fourth units of the Kakrapar nuclear power plant, having 1,400 MW capacity. The project is estimated to cost Rs 12,000 crore.
In the JV, Nalco currently has 26 percent stake and for that its equity contribution requires to be Rs 894 crore. However, payment of this amount is held up as government approval is still awaited.
The lack of government approval has been a major reason for Nalco not being able to meet its capex targets in the last two years (2012-13 and present fiscal).
Besides, the company has been moving slowly with its proposed 1 million tonnes per annum (MTPA) alumina refinery project in Gujarat despite the draft DPR (detailed project report) being submitted by MECON in April, 2013.
Sources said that final go ahead has not yet been given by the company management to the DPR for the Gujarat project, which is part of company's vision 2020 to increase its alumina making capacity to have over 5 MTPA.
The "extra-cautious approach" of the company has already led to 55 percent escalation in the estimated costs for the project to Rs 6,300 crore from originally estimated Rs 4,065 crore, they said.
Nalco, which is a zero debt and cash rich company, has reported a profit after tax of Rs 470 crore and net sales of 4,868 crore during the first nine months of the current fiscal.
First Published: Sunday, February 23, 2014, 15:38