Different initiatives by the Vedanta-owned Bharat Aluminium Company Ltd (Balco) in Chhattisgarh to effectively counter a tough challenge caused by the significant fall in London Metal Exchange (LME) price, from $2204/MT in Feb’12 to $1602/MT in Jun’15, virtually turned into a movement. Vedanta acquired 51 % share in Balco, which was a public sector undertaking, in 2001. Under the leadership of Ramesh Nair, Chief Executive Officer & Whole Time Director, Balco the strategy followed by the organisation worked and the company has cut losses of $ 700 per metric tonne on aluminium price. In an exclusive interview with Sahar Khan, the CEO candidly talks about challenges the aluminium industry faces as he reveals more about his organisation.
Tell us about the aluminium consumption and its status in India?
Aluminium is the only metal in the country where 50 percent of it’s consumption is imported. India consumes near about 3 million tonnes of aluminium per annum and nearly 1.5 MT is imported. We are in touch with the governments to safeguard the minimum import price similar to that given to steel because aluminium needs it. This measure is also in line with the PM’s vision to ‘Make in India’ and ensure that the domestic markets flourish. Primary aluminium demand is expected to grow by 6 percent per annum till 2017-18.
Balco has had to combat significant losses to rise back, what lead to this situation in the first place?
The company had to deal with the impact of recession. We faced commodity crash, the markets fell badly leading to a major crisis for aluminium. The fall in prices was exacerbated by a slowdown in the global demand. Following these negative developments Balco’s sheet rolling plant was shut in 2015.
What were the challenges faced to set Balco back on the growth trajectory ?
There were numerous challenges. Right from the board of directors in the management to the worker unions all the stakeholders were taken into confidence. An effective plan was made and step by step all the initiatives were put in place. Smart work with collective decision on well thought-out action plans led to democratic style of functioning and the approach yielded improved results
What measures were implemented to initiate the change?
We began taking tough counteractive measures around mid-2014. And the visit by Vedanta chairman Shri Anil Agrawal to Korba in April this year acted as a big stimuli for the organisation motivating the Balco into executing productive decisions on all major initiatives. Besides going for huge cost reduction and curtailing high expenditure, the manpower was restructured, the inefficient units were revamped and we commissioned a new 1200 MW thermal power plant. Combined with all these steps, effective monitoring and discipline on work culture have put the company back in the right shape.
What was the outcome of these measures?
The organisation not just cut the losses of $700 per metric tonne it had to bear on aluminium price owing to market crash, but for the first time a full production capacity both in aluminium and power production was achieved since May this year. With the indicators for strong business recovery on aluminium still remaining faint globally, the accomplishments couldn’t have come at a better time. The coal linkage option by the central government facilitated the company to access the coal locally from Korba instead of importing from Indonesia has further checked the losses.
Since 2001, tell us about how Balco has progressed?
From 100 KTPA aluminiumproduction and 270 MW of power generation in 2001, Balco presently produces 570 KTPA aluminium and 2010 MW power. From 2004 till 2016, two state of the art pre-bake aluminium smelters (configuration 245 KTPA & 325 KTPA) and two CPP / IPPs (4 x 135 MW & 4 x 300 MW) have been added to the same factory complex in Korba. Till date the company has invested more than ` 15000 crores back in Korba location alone.
After dealing with the current challenges,what is Balco’s strategy for the future?
We will go ahead consolidating on what we have achieved. Balco with a market share of over 25 percent now aims to increase the aluminium production from 0.6 million tonne per annum to one million capacity, but that will depend on how we get to access the new sources of raw material (bauxite).
How is Balco going ahead with the corporate social responsibility?
We have scaled up our CSR activities. We have three focus areas. First – women empowerment engaging with communities through self-help-groups, second – skill development and third – focusing on infrastructure development. In its 51st year of existence Balco is as much a part of the society as the people and the state, everyone likes to associate with Balco and takes pride. The company gives direct and indirect employment to around 10000 people.
How do you see the ‘Start-up India, Stand up India’ mission?
Such initiatives will not just enhance the scope of employment but also boost up the economic activities. It is essential and the need of the hour. And that’s how the nation also grows.
What are some of the major recognitions Balco has received?
The major awards received in the FY 2015-16 were: Energy Efficient Unit Award in National Award for Excellence in Energy Management 2015 organised by CII, India Manufacturing Excellence Award 2015- Gold in Mega Industries organised by Frost & Sullivan and Times of India, Green Apple Award 2014, Company of the Year Award for Excellence in CC & CSR 2014, Qimpro Award 2015- 2nd prize (Runners Up) under Qualtech Prize for Sustainability, Best CIO Award and Best Innovative Award in the field of Information Technology by International Data Group, National Award 2014 for Innovative Training Practices, Lean Leadership Gold Award, India Green Manufacturing Excellence Award 2014, Shristi Good Green Governance Award for Metal & Power.
Follow