ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Poor Results despite Higher Sales Revenue

Poor Results despite Higher Sales Revenue Hansavivek INDIAN ALUMINIUM (INDAL) has turned out very poor results for 1980, mainly as a result of government's delay in granting a price increase for aluminium to compensate producers for increases in raw material costs. The directors say that throughout the year the company had to sell metal at retention prices which were lower than its cash cost of production. The price increase granted on March 27 last is inadequate as it does not take account of increase of about Rs 2,000 per tonne in the cost of production for metal, arising largely from higher prices of petroleum products announced in January 1981 and increase in the smelter power cost at Belgaum from February 1. Apart from loss in revenue in 1980, the company has incurred a loss of over Rs 3 crore in the first quarter of the current year. The directors observe that if the present system of price administration continues to operate such that controlled selling prices of metal are always going to lag behind production costs, it will be impossible for the company to make reasonable profits which are essential to finance its working capital needs in an inflationary environment. Also, it will not be able to undertake essential replacement of existing facilities, leave alone its proposed expansion programme. India's metal production in 1980 was only 57,857 tonnes, compared to 80,607 tonnes in the previous year. The Hirakud smelter was shut down for most of the first six months due to complete stoppage of power from Orissa state authorities. At Belgaum, in Karnataka, the smelter was subject to power cuts averaging 74 per cent between January and June. Power cuts were withdrawn in July, but a cut of 33.1 per cent has been imposed since December 1 last. This is equivalent to a 46 per cent cut on Belgium's contract limit of 171 MW. Output of extrusions at Alupuram, and of metal at Alupuram and Belgaum, were affected by labour problems at these locations.

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