A PROJECT REPORT

ON

PROJECT TITLE
“STUDY OF ALUMINIUM INDUSTRY AND DRIVERS
AFFECTING GROWTH OF THE INDUSTRY”

SUBMITTED BY
SUBUDHI SOUMYA RANJAN BEZ
KIIT SCHOOL OF MANAGEMENT
ROLL NO-18202127

UNDER THE GUIDANCE OF

Prof. Jitendra Mohanty Mr. Satyabrata Behera

KIIT School of Management Manager (Marketing), NALCO

1
 KIIT SCHOOL OF MANAGEMENT

BHUBANESHWAR-751024

CERTIFICATE OF FACULTY GUIDE

This is to certify that this project report titled” STUDY OF ALUMINIUM INDUSTRY AND
DRIVERS AFFECTING GROWTH OF THE INDUSTRY” is an original work done by Mr. Subudhi
Soumya Ranjan Bez and has been executed under my supervision.

Prof. Jitendra Mohanty

KIIT School of Management,
KIIT University

2
 KIIT SCHOOL OF MANAGEMENT

BHUBANESHWAR-751024

DECLARATION

I do hereby declare that this project work entitled “STUDY OF ALUMINIUM INDUSTRY AND
DRIVERS AFFECTING GROWTH OF THE INDUSTRY” by me for the partial fulfilment of the
requirement for the award of MBA is a record of my own research work. The report embodies
the finding based on my study and observation and has not been submitted earlier for the
award of any degree or diploma to any Institute or University.

SUBUDHI SOUMYA RANJAN BEZ

ROLL NO - 18202127

3
 ACKNOWLEDGEMENT
I have taken efforts in this project. However, it would not have been possible without the kind
support and help of many individuals and the organisation. I would like to extend my sincere
thanks to all of them.

I express my deep gratitude to my Training guide Mr. SATYABRATA BEHERA, MANAGER,

MARKETING (NALCO) who showed me the right and the planned way and because of his
constant guidance, valuable thoughts and patience all through course of project and
encouraging me to think differently, I was able to complete the project in a successful way.

My project guide Prof. JITENDRA MOHANTY, whose enthusiasm towards my project provoked
me throughout to commit my best efforts and achieve the desired result. I put deep
benevolence and gratitude to Prof. JITENDRA MOHANTY.

I would like to express my gratitude towards my parents and members of “Department of

Business Administration, KIIT SCHOOL OF MANAGEMENT, Bhubaneswar for their kind co-
operation and encouragement which helped me in completion of this project.

My sincere thanks and appreciations also go to all the people who have helped me immensely
in developing the project.

SUBUDHI SOUMYA RANJAN BEZ

18202127

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 CONTENTS
1 EXECUTIVE SUMMARY 7

2 INDIAN ALUMINIUM INDUSTRY 8

3 GLOBAL ALUMINIUM INDUSTRY 8
4 INTRODUCTION OF NALCO 9
5 ALUMINIUM PRODUCTION PROCESS 12
6 CONSUMPTION PATTERN OF ALUMINIUM 13
7 PER CAPITA CONSUMPTION OF ALUMINIUM 16
8 PORTERS FIVE FORCE MODEL FOR NALCO 17
9 SWOT ANALYSIS OF NALCO 19
10 PEST ANALYSIS OF NALCO 20
11 GLOBAL ALUMINIUM INDUSTRY ANALYSIS 21
12 INDIAN ALUMINIUM INDUSTRY ANALYSIS 22
13 LME 22
14 COMPETETITORS ANALYSIS 24
15 RESEARCH METHODOLOGY 28
16 FACTOR ANALYSIS 30
17 CONCLUSION 36
18 RECOMMENDATION 37
19 REFERENCE 38

20 ANNEXURE 39

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OBJECTIVE OF THE STUDY:

 To study of Indian aluminium industry.

 To study of global aluminium industry.
 Competitors’ analysis in Indian Aluminium Industry.
 Study about London Metal Exchange.
 Analysis & Review of customer satisfaction.

SCOPE OF THE STUDY:

 The data presented is the secondary data collected from web, journals and books.
 The company related data have been collected through internal sources and if in case
any data is missing then because of confidential reason.
 During the review of customer satisfaction analysis I used primary data that are
collected through the help of the company.

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EXECUTIVE SUMMARY:
NALCO is a navratna company under the Ministry of Mines and it was established on 7th
January, 1981. The products of NALCO are Alumina, Aluminium and different primary
aluminium products.
I got the opportunity to be a part of a two month "On-the-Job" training, in the Bhubaneswar
corporate office of this reputed organization. I got introduced to the marketing team during
this project. As a part of my assignment I got to use my past experience in Marketing along
with several analytical tools & methods.
My project report includes completion of several short time assignments in marketing area
such as porter’s five forces for NALCO, SWOT analysis of NALCO, PEST analysis of NALCO and
by using the SPSS tool I have done a factor analysis to determine which factor influences
industries to buy products from NALCO.
For the purpose of factor analysis data have been collected from the customer feedback as
the secondary data from the year 2012 to 2018 and that I got from NALCO marketing
department.
In the area of marketing, I was assigned three short term assignments and that are the
Aluminium production process and the consumption pattern of aluminium, per capita
consumption of aluminium and the production and consumption of aluminium globally and
domestically.
I have gone through the brief introduction of export procedure and the London Metal
Exchange (LME). The LME provides a transparent forum for all trading activities and it was
formed in the year 1877. It provides services like Transparent pricing, Risk management tools,
Delivery of last resort and the export of NALCO started in the year 1987-88.

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INDIAN ALUMINIUM INDUSTRY

Indian aluminium industry was first formed in the year 1808 and it took almost 50 years to
make its production commercially usable. In the world Aluminium is the second most usable
metal after steel due to which Indian economy was growing at the rate of 8% and the demand
of the metal also.
Aluminium industry is rapidly growing fast because of its use in various sectors.
In the year 1938 the production of aluminium started in India, when the aluminium
corporation of India’s plant was commissioned. The plant was set up with the collaboration
with Alcan, Canada which had a capacity of production 2500 tonnes per annum.
In the year 1959, HINALCO was set up which had a production capacity of 20000 tonnes per
annum. Then in the year 1987 MALCO was established which had a production capacity of
10000 tonnes per annum.
Then later in the year 1987, National Aluminium Company (NALCO) was commissioned to
produce aluminium with a capacity of 0.218 million tonnes.
Indian aluminium industry is a highly concentrated industry with the top 5 companies
producing the most of the country’s production and they are HINDALCO, NALCO, BALCO,
MALCO and INDAL.
India stands at the second position in the list of leading primary aluminium producers in the
world followed by China. In the past five years the industry has seen a leading growth in the
aluminium production.
In India there are more than 200 bauxite mines in operations and most of these are small
open cast and manually operated mines. Fifteen major deposits account for 75% of the
country’s production. Among all of them the Panchpatmali bauxite mine of NALCO in Odisha
accounts for about 40% of the country’s production.

GLOBAL ALUMINIUM INDUSTRY

Global primary aluminium production increased by 5.8 percent in 2017, with a 10 percent
increase in China and stable production in North America and Europe. In total, approx. 63.2
million tonnes of aluminium were produced worldwide in 2017. Most of this came from Asia,
which was the source of some 39.8 million tons or about two-thirds of total global production.

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The People’s Republic of China has long since become the world’s largest producer of
aluminium, but even demand is growing there faster than anywhere else. China continues to
be the primary driver of growth in the aluminium industry.
Global demand for primary and recycled aluminium is being fuelled by the trend towards
lightweight construction in the automotive industry.
Here are some top global aluminium production companies in the year 2017 whose
production figures shown beside each company name are in millions of metric tons (mmt).
1. China Hongqiao Group Ltd. (China) - 7.5mmt
2. Aluminium Corp. of China (China) - 3.7mmt
3. Shandong Xinfa (China) - 3.7mmt
4. UC Rusal (Russia) - 3.7mmt
5. Rio Tinto (Australia) - 3.6mmt
6. Emirates Global Aluminium (EGA) (UAE) - 2.5mmt
7. China Power Investment Corp. (China) - 2.4mmt
8. The Aluminum Company of America (Alcoa Inc.) – 2.3mmt
9. East Hope Group (China) - 2.1mmt
10. Norsk Hydro ASA (Norway) - 2.1mmt

INTRODUCTION OF NALCO:

National Aluminium Company Limited (NALCO) was established on 7th January, 1981. It has
units in Odisha at places like Angul and Damanjodi. It was incorporated as a public sector
enterprise of the Ministry of Mines, Government of India in 1981.
It is Asia's largest and the sixth largest, coordinated aluminium complex, encompassing
bauxite mining, alumina refining, aluminium smelting and casting, power generation, rail and
port operations.
NALCO is the first Company in Aluminium sector in the Country to venture into International
market in a big way with London Metal Exchange (LME) registration since May, 1989. The
Company is listed at Bombay Stock Exchange (BSE) since 1992. Presently, Government of India
holds 80.93% equity of NALCO.
The main units of NALCO are at Damanjodi and Nalconagar, Angul. The Bauxite mines called
"Panchpatmalli Mines" is situated at the top of set of five mountains called Panchpatmalli.
These mines are open cast mines. The refinery complex for producing bauxite is located in
Damanjodi. The smelter unit of NALCO is located in Nalconagar, Angul. The company's
headquarters are located in Bhubaneswar, Odisha.

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The bauxite ore that are found from the mines, Initial reserve was estimated at 310 million
tonne and hailed as 7th largest deposit in the world having high grade low silica content
suitable for low pressure energy efficient process for refining.

VISION

To be a Premier and Integrated company in the Aluminium value chain with strategic presence
in Mining both domestic & global, Metals and Energy sectors.

MISSION

To sustainably grow multi-fold in Mining, Alumina and Aluminium business along with select
diversification in Minerals, Metals and Energy sectors, while continuously improving on
efficiency and business practices thus enhancing value for all stakeholders.

Present Activities:
Bauxite Mines:
The bauxite mines situated in the Panchpatmali hills of Koraput district in Odisha, a fully
mechanised open-cast mine is in operation since 1985, serving raw material to Alumina
Refinery located on the foothills. The present capacity is 68.25 lakh TPA.

Alumina Refinery:
Alumina Refinery is in operation since 1986, the Alumina Refinery is located in the beautiful
valley of Damanjodi. The present capacity is 22.75 lakh TPA. There is a 4 x 18.5 MW power
plant for co-generation of power from process steam.

Aluminium Smelter:
The Aluminium Smelter is located at Angul, Odisha having a rated capacity of 4.60 lakh TPA.
The product profile are mainly Primary Aluminium in the form of Standard Ingot, Sow Ingot,
Tee Ingot, Wire Rod, Billet and Rolled Products. The primary Aluminium is LME Registered.

Captive Power Plant:

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Close to the Aluminium Smelter, Captive Power Plant of 1200 MW (10 X 120 MW) capacity
has been established to feed the Smelter.

Wind Power Plants :

The 1st wind power plant of capacity 50.4 MW in Andhra Pradesh was commissioned in
December 2012 and the 2nd wind power plant of capacity 47.6 MW in Jaisalmer, Rajasthan
was finally commissioned in January 2014. Now both the plants are in operation.

Rooftop Solar System:

NALCO has commissioned 260 KWp Rooftop Solar Power plant at Corporate Office and NALCO
Township at Bhubaneswar during the FY 2014-15.

Port Facility:
On the inner harbour of Vizag Port, on the Bay of Bengal, NALCO has mechanised storage and
ship handling facilities for export of Alumina in bulk and import of caustic soda. Besides,
NALCO is also utilizing Kolkata, Paradip and Vizag Ports for exporting Aluminium.

PRODUCT PORTFOLIO:
Aluminium-

 Standards ingots
 Sow ingots
 Wire rods
 Billets
 Cast strip
 Flat rolled products
 T-ingots
Alumina-

 Calcined Alumina
 Alumina Hydrate
 Specialty Alumina & Hydrates
 Detergent grade Zeolite

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ALUMINIUM PRODUCTION PROCESS:

Aluminium production process consists of two processes:

1) Primary production process.
a. Bayer process
b. Hall- heroult process.
2) Secondary production process.
a. Recycling of scraps containing AL.
b. Recycling of aluminium hydroxide.

BAYERS PROCESS
The Bayer procedure is the main mechanical methods for refining bauxite to produce alumina.
Bauxite, the most significant mineral of aluminum, contains just 30–60% aluminum oxide
(Al2O3), the rest being a blend of silica, different iron oxides, and titanium dioxide.

HALL- HEROULT PROCESS

The Hall–Heroult procedure is the major modern procedure for refining aluminium. It includes
dissolving aluminium oxide (alumina) (acquired regularly from bauxite, aluminium's main
metal, through the Bayer procedure) in liquid cryolite, and electrolysing the liquid salt shower,
ordinarily in a reason constructed cell.

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CONSUMPTION PATTERN OF ALUMINIUM
Sir Humphry Davy proposed the name 'Aluminum'
Aluminium is used extensively in the modern world. It has a silvery-white appearance and
displays many unusual properties. It has wide applications in different domains, like transport,
home decor and accessories, building and construction, etc. No other metal can be used in so
many ways as aluminium.
Aluminium is the third most plentiful metal in the Earth's outside layer, and the third most
plenteous component generally speaking. No other metal can contrast with Aluminium with
regards to its assortment of usages.

Aluminium is incredibly popular because it is:

 Lightweight
 Strong
 Resistant to corrosion
 Durable
 Ductile
 Malleable
 Conductive
 Odourless

Two major properties of aluminium for which it is widely used in various sectors are
Malleability and Ductile in nature.

Malleability is said to be the property of a material to deform under compression and

Aluminium is having malleable property that can be rolled or beaten into sheets. Aluminium
is ductile and has a low melting point and density that can be converted into wires.
Aluminium is also 100% recyclable with no loss of its natural properties. It also takes 5% of
the energy to recycle scrap aluminium then what is used to produce.

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 GLOBAL CONSUMPTION OF ALUMINIUM IN
DIFFERENT SECTORS.

5%
4%

7%
26%

TRANSPORT
CONSTRUCTION
8%
ELECTRICAL
MACHINE AND EQUIPMENT
FOIL STOCK

10% PACKAGING
CONSUMER DURABLES
OTHERS

26%
14%

THE MOST COMMON USES OF ALUMINUM

INCLUDE:
TRANSPORTATION
Aluminium is utilized in transportation on account of its unbeatable strength to weight
proportion. Its lighter weight implies that less power is required to move the vehicle, leading
more fuel efficient and eco-friendliness. In spite of the fact that aluminium isn't the strongest
metal, but alloying it with different metals builds its quality. Its corrosion resistance is a special
property, dispensing with the requirement for heavy and costly anti corrosion coatings.

High speed rail system like the Shinkansen in Japan and the Maglev in Shanghai likewise use
aluminium. The metal enables designers to decrease the heaviness of the trains, eliminating
friction resistance.

Now a days aircraft are also using aluminium for the light weight, besides that even
spacecraft, such as space shuttles, contain 50% to 90% of aluminium alloys in their parts.

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BUILDING & CONSTRUCTION
Approximately one-fifth of the world's total consumption of aluminium is used by the
construction industry. Bridges, domes, and roofs of several big structures, like markets, sports
complexes, and stadiums make use of aluminium.

Structures made with aluminium are without maintainance in view of aluminium's security
from erosion. Aluminium is furthermore thermally proficient, which keeps homes warm in
winter and cool in summer. Incorporate the manner in which that aluminium has a delightful
completing and can be twisted, cut and welded to any perfect shape, it licenses present day
architects unlimited chance to make structures that would be hard to make from wood,
plastic, or steel.

The principal building where in aluminium was generally utilized was the Empire State
Building in New York, worked in 1931. Present day building caused utilizing aluminium to
incorporate the Bank of China focal head quarter in Hong Kong and Zaha Hadid's London
Aquatics Center in London.

ELECTRICAL
Electrical hardware, electrical cables, and power utilize about 10% aluminium. Its low
thickness and high malleability is the thing that makes it reasonable for the transmission of
high voltage power over long separations.

In spite of the fact that it has quite recently 63% of the electrical conductivity of copper,
aluminium's low thickness makes it the best choice for long separation electrical cables.

Electrical cables of copper are costly and need additional help structures to help its high
electrical conductivity. Aluminium does not require all these, which saves money on expenses
and being impervious to consumption, it builds its strength. Subsequently, aluminium is
supplanting copper in transformers and wiring frameworks.

It can likewise be utilized in housings, mountings, meld boxes, satellite dishes, TVs, family
machines, sound frameworks, and other correspondence and electronic gear.

CONSUMER DURABLES
Aluminium’s appearance is the reason it is used frequently in consumer goods

Smartphones, tablets, laptops, and flat screen TVs are being made with an increasing amount
of aluminium. Its appearance makes modern tech gadgets look sleek and sophisticated while
being light and durable. More and more, aluminium is replacing plastic and steel components,

15
as it is stronger and tougher than plastic and lighter than steel. It also allows heat to dissipate
quickly, keeping electronic devices from overheating. 1

Apple uses predominantly aluminium parts in its iPhones and Mac Books. Other hi-end
electronics brands like audio manufacturer Bang & Olufsen also heavily favour aluminium.
Interior designers enjoy using aluminium as it’s easy to shape and looks great.

Furniture items made from aluminium include tables, chairs, lamps, picture frames and
decorative panels.

PACKAGING
Around one-fifth of the extracted aluminium is used in the packaging of foods, beverages,
pharmaceuticals, etc.

Cans, trays, foils, bottles, thermos, utensils, kettles, refrigerators, toasters, and saucepans are
made of this element. Aluminium is used as it keeps the food safe, prevents pathogens from
entering the food, and does not affect the taste or smell of the food packed in it. It resists
corrosion, repels water, and is non-toxic, which reduces spoilage of food items. In fact,
aluminium helps protect the food items stored in it from other harmful elements, and hence,
it serves as an excellent packaging material.

PER CAPITA CONSUMPTION OF ALUMINIUM

Global primary aluminium production increased by 5.8 percent in 2017, with a 10 percent
increase in China and stable production in North America and Europe. In total, approx. 63.2
million tonnes of aluminium were produced worldwide in 2017.

China continues to be the primary driver of growth.

The People’s Republic of China has long since become the world’s largest producer of
aluminium, but even demand is growing there faster than anywhere else. China continues to
be the primary driver of growth in the aluminium industry.

But in 2018, Global aluminium production grew at its slowest pace having output totalled
64.34 million tonnes, according to the International Aluminium Institute (IAI), up by just 1.5
percent on 2017.

GLOBAL CONSUMPTION OF ALUMINIUM

16
 GLOBAL CONSUMPTION OF ALUMINIUM PER CAPITA (2017-18)
45 42.1

40
33.3
35
28.7 28.1
30
24.8 24.2
25
18.9
20 16.2
15
10.4
10 7.4
4.8
3.4 2.5
5 2.2
0.8
0

PORTERS FIVE FORCES ANALYSIS

Porter's Five Forces Analysis is an important tool for understanding the forces that shape
competition within an industry.

1. COMPETITIVE RIVALARY:
As there are three major plants of aluminium production in India so the rivalary is quite less
among them.

The three major plants are:

Hindalco Aluminium Plants.

Vedanta limited.

National Aluminium Company Ltd. (Nalco) Aluminium Plants.

Being a market leader in the Indian market NALCO is less rivalary among the competitors.
NALCO holds 26% of the market share.

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NALCO is the low cost producer of aluminium as it has its own bauxite mines. Since the firm
sell this large quantity of product, high levels of production lead to a fight for market share
and results in increased rivalry.

Nalco focuses in the domestic market rather than the export but HINDALCO and VEDANTA
primarily focuses on the export of aluminium.

2. THREAT OF SUBSTITUTES
In Porter's model, substitute products refer to products in other industries. A threat of
substitutes exists when a product's demand is affected by the price change of a substitute
product.

On one side, the usage of aluminium is rising reliably in the vehicle/car and advancement
region anyway steel still remains a guideline substitute in perspective on its for the most part
lower cost. On the contrary side, copper has been steadily substituting aluminium's use in the
power section in view of its higher conductivity.

In any case, with properties like higher proportion to-weight extent, quality, higher
consumption opposition and tolerably lower cost, aluminium can hold fast. Thusly the
utilization of aluminium is most likely going to augment over a whole deal period.

3. BARGAINING POWER OF BUYER:

A market in which there are many suppliers and one buyer. Under such market conditions,
the buyer sets the price.
As aluminium prices are determined by (LME) demand and supply, the commodity or
customers enjoy relatively high bargaining power.

4. BARGAINING POWER OF SUPPLIER:

The bargaining power is quite low for fully integrated aluminium smelters as they have their
own mines.
As NALCO has its own bauxite mines so the bargaining power of supplier is low.
However the bargaining power is limited in case of coal, as NALCO depends upon the
Mahanadi Coalfields Limited (MCL) and import of coals.

5. THREAT OF NEW ENTRY:

There are high barriers to entry in this industry so the threat of new entry is low.
It is difficult for the new industry to established and compete with the existing industry
because to form an industry like aluminium industry you need both refinery and smelting
plant and due to which the investment is very high and the most important thing is land.

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To run an aluminium industry the availability of raw material is necessary.

SWOT ANALYSIS
STRENGHTHS:

 Availability of huge deposite of bauxite.

 Modernized old plant i.e state of art technology.
 Huge power production.
 Strong managerial capability.
 Low cost and efficient labour cost.
 Strongly globalized industry and rising worldwide intensity.
 High profitability leader.
 Increased customer satisfaction.

WEAKNESS:

 Scattered plant sites.

 Higher cost of energy.
 Dependence on import of aluminium production technology.
 Depends on LME.
 Import of coal at relatively higher price.
 Limited product range.

OPPURTUNITIES:

 Increasing demand for consumer durables.

 Urbanization and globalization.
 Growth of the potential domestic market.

THREATS:

 Environmental concern.
 High task rate imposed on the input metal.
 Competition from scrap imports and very high threat from substitute metals
particularly plastics.

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PEST ANALYSIS
POLITICAL FACTORS
In the year 2016-17 NALCO had to get back its 25% stake from the government.

The buyback, initiated by the finance ministry, was a part of the government’s efforts to raise
much-needed funds, including by selling shares worth up to rs- 565 billion ($8.5 billion) to
curb the 2016-17 fiscal deficit.

ECONOMICAL FACTORS
Development rates, industry development, regular elements, work costs, customer
discretionary cashflow, joblessness rates, tax collection, expansion, loan costs, accessibility of
credit, financial arrangements, crude material expenses and so on are the efficient variables
that can influence an industry.

The interest for aluminum is developing quick in the power segment and different divisions
which are rising exceptionally quick are the vehicle and the bundling segment in India. In the
vehicle, especially the new age autos because of mileage just as the developing mindfulness
about the eco-friendliness of utilizing aluminum metal in the transports, trucks just as in the
railroad moreover. So the development rate will increment for the aluminum businesses
soon.

As NALCO is a coordinated plan of action because of the nearness in all the three phases of
aluminum generation—bauxite, alumina and aluminum. On account of its entrance to
astounding bauxite and coal mineshafts, its expense of generation is one of the most reduced
on the planet. As of late there was an accident in aluminum costs china chop down its
complete generation by 0.8 million ton in 2019 when contrasted with 2018 yet NALCO did not
hamper its creation by value fall and is proceeding with limit development.

SOCIAL FACTORS
NALCO committed to provide a socially accountable work environment to all employees and
respecting employees right to ensure a decent workplace.

When NALCO established total 660 number of people around people of 7 villages were
displaced and they have been paid for their land which was taken by NALCO and an able
bodied person from each family got a job.

Metallic shiny aluminium powder dust can be seen deposited everywhere in the villages, i.e.,
on the roofs, on walls, on trees and vegetation and in wells of drinking water.

20
Effluent from NALCO is being let out without satisfactory treatment and it is directly let into
a small rivulet (stream) that is the source of drinking water for the surrounding villages,
especially during summer when the wells are dried up.

Gas and fumes emitted from smelters of NALCO are causing damages to hundreds of acres of
paddy fields with standing crop getting burnt (dried).

To overcome this NALCO was supplying two tankers of water every summer which is grossly
inadequate to villagers, hence to compensate for the deficit the villagers drink the water from
the polluted rivulet. Piped water was being supplied by NALCO and a Health education on
fluorosis is also provided by NALCO.

TECHNOLOGICAL FACTORS
NALCO is utilizing Information Technology (IT) to increase the association's journey for
supportable development and ceaseless improvement in procedures and strategic policies.

Undertaking Resource Planning (ERP) application has been actualized to coordinate all the
business capacities, for example, Sales and Distribution, Finance and controlling, Materials,
Human Resource and Production intending to guarantee uniform procedure, to improve data
accessibility, straightforwardness and basic leadership. The ERP application was moved up to
actualize GST.

Consistent with its slogan "Once a Nalconian consistently a Nalconian", NALCO has propelled
an App for its Retired Employees-"Hamesha Nalconian". The App gives highlights like Medical
Reimbursement data, In-house e-magazine, significant fliers and approaches. Establishment
and charging of Emrion Nano Technology based deflouridation plant finished.

GLOBAL ALUMINIUM INDUSTRY ANALYSIS

Globally aluminium industry has a capacity of producing 65 million tonne aluminium. But
actually it has been recorded that aluminium production is 63.7 million tonne and
consumption is 65.3 million tonne in the year 2017-18.

So here the supply is less and the demand is more so we can say that aluminium market is in
deficit market.

Whenever this type of deficit market comes aluminium from the global stock warehouse is
taken in to account. Presently there are 11 million tonne of aluminium is stocked in different
warehouses.

China is the largest producer and consumer of the aluminium. It produces 50% of the world
aluminium production (about 32 million tonne)

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INDIAN ALUMINIUM INDUSTRY ANALYSIS
In India there are 3 primary producer of aluminium and they are VEDANTA LIMITED,
HINDALCO and NALCO.

Indian aluminium industry has a total capacity of producing 4.13 million tonne aluminium.

From which VEDANTA LIMITED has a capacity of producing the highest amount of aluminium
i.e 22.15 lakh tonne and HINDALCO has a capacity of producing 13.54 lakh tonne and NALCO
has a capacity of producing 4.6 lakh tonne of aluminium annually with 80% capacity
utilization.

In the year 2017-18 NALCO has produced 4.26 lakh tonne of aluminium and VEDANTA
LIMITED and HINDALCO has produced 16.7 and 12.08 lakh tonne aluminium respectively. The
sum total of production is 3.38 million tonne.

Same in the year 2017-18 the domestic aluminium consumption is 3.5 lakh tonne from NALCO
and 6.41 and 6.72 lakh tonne from HINDALCO and VEDANTA limited respectively. India
imported aluminium from different countries is 19.58 lakh tonne. The sum total of domestic
aluminium consumption is 3.62 million tonne.

In India the industries who depends upon the aluminium industry mostly imports aluminium
from different countries because if they buy their total amount of needed aluminium from
Indian manufacturer the tax rate will increase as the current GST rate is 18% but if they
imports aluminium they have to pay 7.5% of the custom duty.

LONDON METAL EXCHANGE

The London metal exchange (LME) is the futures exchange with the world's largest market in
options and futures on base and other metals. It was formed in the year 1877.

LME SERVICES

 TRANSPARENT PRICING

The LME gives a straightforward commercial center to the exchanging of prospects contracts
for non-ferrous metals and plastics. As the exchanging occurs in an everyday schedule so the
costs are found and distributed by the Exchange.

 RISK MANAGEMENT

Here LME offers who are its member including the buyers and sellers the opportunity to
hedge their price risk and also gain protection from future movement of price.

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  DELIVERY

Providing for appropriately located storage and delivery facilities to enable market
participants to make or take physical delivery of approved brands of LME traded contracts.
And it also acts as a source of material in time of extreme shortage.

ACCESS TO THE LME (HOW LME TRADES)

There are currently three ways of trade in the LME

 RING TRADING

Often called as Open-outcry, the trading takes place in the ring. It requires the traders of LME
member firms to be seated throughout of the trading session and during this trading, traders
make verbal bids and offers each other for LME contracts.

 LME SELECT

LME select is a electronic trading platform where LME member firms are connected to LME
select system which allows them to trade electronically.

 TELEPHONE TRADING

It is a 24-hour global market place transacted between member companies over the
telephone.

23
COMPETETITORS ANALYSIS

KPA NALCO HINDALCO VEDANTA

PRODUCTS Types of product finished Ingots and

products wire
Alumina-
include product, slab
Calcined Alumina Alumina, and alloy
Primary
Alumina Hydrate ingots and
Aluminium in
products
Specialty Alumina & Hydrates the form of
Ingots, Billets under the
Detergent grade Zeolite brand name
and Wire rods,
Aluminium- value-added ‘VENDANTA
products such L’
Standards ingots
as Rolled
Sow ingots products,
Extrusions and
Wire rods
Foils
Billets
Cast strip
Flat rolled products
T-ingots

PLACE No. of international Location-NIL No Bharat

international Aluminium
National location:
location. Company Ltd
1. Mines & refinery complex, Damanjodi,
1. Mines & Vedanta
dist. Koraput,
refinery alumina
2. Smelter plant, Nalco nagar, anugul- complex, limited
(Jharsuguda,
759122,odisha
Baphlimali Odisha)
3. Captive power plant,Anugul- mines, Utkal
759122,odisha Alumina, 1. Mines &
refinery
4. Port facilities, port Muri complex
area,Visakhapatnam-530035,Andhra (Jharkhand)
Lanjigarh
Pradesh

24
 5. Wind power plant-1:Gandikotta, dist. 2. Smelter 2. Smelter
plant plant
YSRKadappa, Andhra Pradesh
6. Wind power-11:dist.Jaisalmar, Renukoot, in Jharsuguda,
Uttar Pradesh, (Odisha)
rajasthan
India Hirakud
7. No. of port facilities:03 (visakhaptnam, (Odisha) 3. Captive
Kokatta, Paradeep) power plant
3. Captive
8. No. of regional offices:04 (New power plant 9 x 135 MW
Delhi,Mumbai,Chennai,Kolkatta) coal-based
Renusagar Captive
9. Branch office:01(Bengaluru) power plant Power Plant
10. No of stockyards:11 (Uttar at
Pradesh) Jharsuguda,
(jaipur,Faridabad,.Baddi, (odisha)
kolkatta,Bengulur,Chennai,Visakhapatna Hirakud
(Odisha) 4. Vedanta
m, Bhiwandi&silvassa, Vadodra, Delhi) corporate
4. hindalco office-
corporate
office- Vedanta
House
Hindalco
Industries 75, Nehru
Limited Road,Vile
Pandurang Parle (East)
Budhkar Road Mumbai,
India 400099
Worli,
Mumbai 400
030

PROMOTION Different CSR activities like major relif Hindalco is Vedanta

promoting limited id
project, major contribution in public park,
itself by promoting
major contribution towards sports and different CSR itself by
activities like
culture, schools and colleges different
Health Care,
CSR
Sponsorship in different sports event and Education,
Skills training, activites.
different culture event
capacity
building,

Womens
empowermen
t, agricultural
support etc.

25
PRICE Prices of the product of NALCO are fixed LME prices LME prices
on the LME platform.

EXPANSION 1 MTPA capacity 5th stream alumina Rs 2,100-crore Vedanta

refinery brownfield project at Damanjodi investment at proposes to
PROJECTS at an estimated cost of Rs 5,540 crore the extrusion expand its
which is expected to be completed by plant in capacity from
April, 2021 and around Rs 9,000 crore is Mudra, 1.6 MMTPA
being spent for establishment of 6 lakh gujurat with to 1.8
TPA brownfield smelter at the existing an annual MMTPA
complex at Angul in Odisha. capacity of which it will
137,000 be among the
tonnes. 6th largest
single-
In Sambalpur, location
Hindalco will aluminium
invest close to plants
₹4,000 crore globally.
where its flat
rolled
products unit
will have an
annual
capacity of
375,000
tonnes per
annum.
NET SALES 9505 crore 45496 crore

(2017-18)
PROFIT BEFORE 2039 crore 2229 crore 9224 crore
TAX (PBT)

(2017-18)
PROFIT AFTER 1342 crore 1436 crore 7256 crore
TAX (PAT)

(2017-18)
DIVERSIFICATIO NALCO introduced Strontium Modified NA NA
Aluminium Billets CH-91 grade, as a part
N of its product diversification.

MERGERS & NALCO merge with Ecolab. HINDALCO In 1979

merge with VEDANTA
ACQUISITION
Nalco Holding Company became a Novelies to acquired the
subsidiary of Ecolab Inc. in December become the Shamsher

26
2011 after the completion of the US$5.4 biggest rolled Sterling
billion acquisition by Ecolab. aluminium Corporation
products (subsequently
maker and the renamed
5th largest Sterlite
integrated Industries), a
aluminium manufacturer
manufacturer of power and
in the world. control
cables.
2. Indian
Aluminium 2. In 2001,
Company The company
(Indal) merged acquired a
with Hindalco. majority stake
in Balco.
3.HINDALCO
acquired 3. In 2006
Aleris, an Vedanta
aluminium acquired
controlled Sterlite Gold,
product a gold mining
industry, that business
made
HINDALCO a 4. In 2007,
largest Vedanta
aluminium Resources
company in bought a 51%
the world. stake in Sesa
Goa (India's
largest
producer-
exporter of
iron ore)

5. In 2008
Vedanta
bought Certin

6. In 2010,
VEDANTA
acquired
Anglo-
American's
portfolio of
Zinc assets in
South Africa,
Namibia and
Ireland.

27
RESEARCH METHODOLOGY:
I have used the secondary data that has been collected by the NALCO marketing department
for the factor analysis.

CUSTOMER SATISFACTION INDEX

Customer satisfaction index is an indicator of customer satisfaction on different aspects of
product and services offered by NALCO.
Regional offices and corporate marketing department calculate the average weightage for
each value category/factor product wise.
The CSI happens twice a year in the June/July and December/January.
Mathematically CSI = ∑(W×R) × ∑(W×10)
W = weightage of value category/factor
R = rating of value category/factor
I have used data from 2012 that has been given by different industries as customer of NALCO
I have used the descriptive statics method to find out the mean, standard deviation

Descriptive Statistics

Mean Std. Deviation N

CHEMICAL_COMPOSITION 9.15 .758 68
SURFACE_FINISH 8.96 .800 68
PRESENCE_OF_DROSS 7.93 1.642 68
PACKAGING_and_LABELIN 8.24 1.161 68
G
SHIPMENT_SCHEDULE 8.59 1.374 68
DOCUMENTATION 8.56 1.386 68
SHIPMENT_INFO 8.29 1.467 68
EASE_OF_RCVING_CARG 8.38 1.506 68
O_AT_DISPORT
MODE_OF_CONTRACT 9.03 .914 68
PAYMENT_TERMS 8.87 1.021 68

28
PRICING_MECHANISM 8.94 .751 68
RESPONSE_TO_G.QUARR 8.44 1.397 68
IES
READRESSAL_OF_COMPL 8.19 1.458 68
AINTS

We can find out from the above table that mean of Chemical Composition is high among all,
that is 9.15 so, that factor influences more customer to buy product from NALCO.

CORELATION TABLE:

29
FACTOR ANALYSIS:
I have used the Principal Components Analysis to determine the factor analysis.

Principal Components Analysis is the approach where the total variance of the data is
considered.

The KMO estimates the sampling adequecy (which decides whether the reactions given with
the example are sufficient or not) which should to be more than 0.5 for a satisfactory factor
analysis to continue.

KMO and Bartlett's Test

Kaiser-Meyer-Olkin Measure of Sampling Adequacy. .821
Bartlett's Test of Sphericity Approx. Chi-Square 623.467
Df 78
Sig. .000

30
In the above table we can proceed to do factor analysis as the KMO Value is more than 0.5.

Communalities
Initial Extraction
CHEMICAL_COMPOSITION 1.000 .715
SURFACE_FINISH 1.000 .723
PRESENCE_OF_DROSS 1.000 .715
PACKAGING_and_LABELIN 1.000 .715
G
SHIPMENT_SCHEDULE 1.000 .721
DOCUMENTATION 1.000 .802
SHIPMENT_INFO 1.000 .781
EASE_OF_RCVING_CARG 1.000 .741
O_AT_DISPORT
MODE_OF_CONTRACT 1.000 .739
PAYMENT_TERMS 1.000 .676
PRICING_MECHANISM 1.000 .760
RESPONSE_TO_G.QUARRI 1.000 .814
ES
READRESSAL_OF_COMPL 1.000 .828
AINTS
Extraction Method: Principal Component Analysis.

From the above communalities table we found that all the value are greater than 0.5 so we
can further proceed.

TOTAL VARIANCE TABLE:

31
In the total variance table in the Extraction Sums of Square Loadings column we found that
1st component is having variance 47.271 and 2nd and 3rd are having 16.794 & 10.778 variance
and other component are not significant.
These three component are giving the whole amount of 74.844% to influence customer to
buying product from NALCO.

COMPONENT MATRIX TABLE:

Component Matrixa
Component

32
 1 2 3
CHEMICAL_COMPOSITION .561 .167 -.610
SURFACE_FINISH .624 .113 -.566
PRESENCE_OF_DROSS -.058 .705 .462
PACKAGING_and_LABELIN .622 .214 .532
G
SHIPMENT_SCHEDULE .825 -.191 -.061
DOCUMENTATION .803 -.397 .001
SHIPMENT_INFO .812 -.343 .070
EASE_OF_RCVING_CARG .828 -.234 .025
O_AT_DISPORT
MODE_OF_CONTRACT .649 .563 -.033
PAYMENT_TERMS .614 .544 .060
PRICING_MECHANISM .392 .744 -.231
RESPONSE_TO_G.QUARR .869 -.138 .197
IES
READRESSAL_OF_COMPL .821 -.217 .325
AINTS
Extraction Method: Principal Component Analysis.
a. 3 components extracted.

Component matrix shows the extracted values of each item under 3 component. The higher
the extracted value the higher the factor contributes to the component.
From the component matrix we can manually calculate the communalities value and the
eigen value.

ROTATED COMPONENT MATRIX TABLE:

Rotated Component Matrixa
Component
1 2 3

33
CHEMICAL_COMPOSITION .219 .074 .813
SURFACE_FINISH .310 .064 .789
PRESENCE_OF_DROSS -.216 .777 -.255
PACKAGING_and_LABELIN .596 .583 -.140
G
SHIPMENT_SCHEDULE .765 .061 .364
DOCUMENTATION .854 -.101 .251
SHIPMENT_INFO .859 -.023 .207
EASE_OF_RCVING_CARG .812 .057 .280
O_AT_DISPORT
MODE_OF_CONTRACT .296 .672 .447
PAYMENT_TERMS .303 .682 .346
PRICING_MECHANISM -.060 .673 .551
RESPONSE_TO_G.QUARR .857 .222 .172
IES
READRESSAL_OF_COMPL .890 .189 .021
AINTS
Extraction Method: Principal Component Analysis.
Rotation Method: Varimax with Kaiser Normalization.a
a. Rotation converged in 5 iterations.

From the rotated component matrix we found that:

1. Packaging & labelling
2. Shipment schedule.
3. Documentation.
4. Shipment info.
5. Ease of receiving cargo at port.
6. Response to general quarry.
7. Re-addressal to complaints.
These 7 factors are coming under the 1st component and we can name it as
“Logistics & General services”.

In the 2nd component:

1. Presense of dross.
2. Mode of contract.
3. Payment terms.
4. Pricing mechanism.

34
These four factors are coming under 2nd component so we can name it as “contractual mode”.

In the 3rd component:

1. Chemical composition.
2. Surface finish.
These two factors are coming under 3rd component so we can name it as “quality of the
product”.

So, from the above total variance table we saw that component 1 is having variance 47.271%
so, the 1st component is contributing more for the industries to buy primary aluminium from
NALCO because of ease transportation and due to its service.

35
 CONCLUSION
As part of its diversification plans, National Aluminium Company Limited (NALCO), A Navratna
company has got a good position in the Indian aluminium market. Its products enjoy a
worldwide reputation and are accepted in many of the countries. As per the research
conducted it was found that even though NALCO is a major producer of aluminium and
aluminium rolled products in the domestic market there are certain areas in which other
suppliers like Hindalco and Balco are gaining a competitive advantage.

The study reveals that in domestic market Hindalco is the major competitor of NALCO and to
survive in the market with a competitive advantage NALCO have to implement various
winning strategies.

The study reveals that as NALCO is a central Govt. run organization, but still Hindalco’s
performance growing at a faster pace. This is only due to greater expansion project and
greater amount of productivity. So NALCO should go for further expansion project.

From the factor analysis we got that NALCO is very much relying on its logistics and general
services.

36
 RECOMMENDATION
NALCO should go for diversification. Along with of producing flat rolled products NALCO
should also produce direct consumer end product like aluminium foil. As we know that now-
a-days consumers are more conscious about their health and food for which the consumption
rate of aluminium foil is increasing. So NALCO should target the aluminium foil market.

NALCO should go for producing aluminium canes. As the production and also consumption
rate of aluminium canes is increasing day by day and also it is easy to recycle aluminium canes.

NALCO should go for producing aluminium caps for bottles because most of the bottling firms
depends upon aluminium caps for packaging of their bottles.

NALCO should continue with “Participation in global tenders”. Because, we know that global
consumption rate of aluminium is increasing with a cagr of ~3.6 %, so to cater the global
consumers demand and to be ahead of the competitors NALCO should do it.

NALCO should go for expansion programs as we know that in domestic market other
competitors like Hindalco and Vedanta are using the strategy of expansion either by acquiring
existing firms or by increasing their productivity. And to compete with these competitors
NALCO should use the expansion strategy.

37
 REFERENCE

BOOKS:-

 Marketing Management
(15th EDITION)
PHILIP KOTLER, KEVIN LANE KELLER,

INTERNET:-

 http://www.NALCO.com
 http://www.hindlco.com
 http://vedantaresources.com
 http://lme.co.uk

COMPANEY JOURNAL:-

 Office document
 Company annual report

38
ANNEXURE

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