Nalco advanced further today on good buying support following reports that the government has put the disinvestment programme for India's largest state-run aluminium company  on the fast track.

The company's stock rose by 2.37% to Rs 90.60 on the BSE, recording a volume of close to 50,000 shares by 12:05 IST. In the last one-and-half months, between 31 March and 16 May 2003, the stock advanced by 26% to Rs 88.50 from Rs 70.25.

The government proposes to divest as much as 60% stake in National Aluminium Company (Nalco) through a combination of strategic sale, American Depository Receipt (ADR) issue and a domestic issue. The government had initially planned to complete all three processes (the strategic sale, the ADR float and the domestic issue) together to ensure maximum realisation for the government holding. But the protests by the trade unions and some political parties has  forced the government to postpone the 29% strategic sale  and proceed with only the domestic and ADR issues.

Earlier, there were reports that  the government may offload 10% stake as early as September 2003 in the domestic market, while the ADR issue (for another 20%) would be in November 2003. Both these offerings would be conducted through the book-building route.

The prospectus for the domestic offering, comprising 6.4 crore equity shares, is expected to be filed with the Securities and Exchange Board of India by July 2003. The offer document for the ADR issue would also be finalised and filed with the Securities and Exchange Commission in the US around the same time.

For Q4 ended 31 March 2003, Nalco's net profit grew by 29% to Rs 176.68 crore, compared to Rs 137.06 crore in the corresponding period of the previous year. Net sales increased by 11% to Rs 721.47 crore from Rs 649.76 crore in MQ 2002. A healthy indicator came in the form of the company's operating profit rising by 25.6% to Rs 355.54 crore (Rs 283.11 crore).

For FY 2002-03, the company posted a 27.5% jump in net profit to Rs 522.07 crore (Rs 409.35 crore) on a 17.5% increase in total income to Rs 2,789.87 crore (Rs 2,375.64 crore).

Nalco reported a 5.6% rise in aluminium output to 2,44,708 tonnes in FY 2002-03  Bauxite production spurted 35.6% to 47.77 lakh tonnes, while alumina production surged 33% to 14.81 lakh tonnes. During the same period, alumina sales zoomed by 54.8% to 10.37 lakh tonnes and aluminium sales expanded 7% to 2.29 lakh tonnes.

Analysts expect the company's performance to improve in the current quarter following a steady trend in aluminium prices, considering that inventories at the London Metal Exchange (LME) have decreased. Also, global demand seems to be picking up. With consumption in the East Asian economic power China continuing to be strong and an end to the war in Iraq, demand for aluminium looks poised to grow in the short term.

Nalco's profitability may improve in 2003-04 and 2004-05 in view of increased volumes from enhanced capacity addition. The company is one of the low-cost producers of aluminium in the world.