The 3QFY11 results conference call for National Aluminium took place earlier today and the following are the key takeaways from the call.

􀀟 Alumina production for the quarter was 398kt (+13% qoq) while aluminium metal production was 111kt (+1% qoq and flat yoy).

􀀟 Alumina sales was 164kt (-27% qoq and -15% yoy) while aluminium sales was 104kt (-4% qoq and -12% yoy). Average realization of alumina was US$356/tonne while for aluminium, it was US$2,390/tonne, a premium of US$50 over average LME price. The sequential decline in volumes and the lag in pricing, we believe, explains the flattish top-line despite strength in LME prices.

􀀟 The 11% sequential decline in power and fuel costs was expected due to resumption of coal supplies from Coal India and less dependence on imports/e-auction. For the quarter, 85% of its coal requirements was met through linkages with the rest through e-auction/imports. This led to cost of power generation declining to Rs2.1/unit.

􀀟 Alumina refinery expansion to 2.1mt has been further delayed and is now expected to be commissioned by April 2011.

􀀟 Capital expenditure budget for FY11 has been revised downwards to Rs9.8bn due to delay in expansion of alumina refinery. Capex for FY12 has been guided for Rs12bn.

􀀟 The land acquisition and statutory clearances have been obtained for Utkal E-block coal and rehabilitation and resettlement processes are on. Mining is expected to commence by FY14. The block has 30mt of reserves and production is expected to be 2mt/pa. We note that the level of ash content is high and the open cast mine is at a distance of 60km from the plant. At an estimated project cost of Rs4bn, the cost of production estimated by management currently is in the range of Rs1300-1400/tonne. This compares with Rs850/tonne for coal got through linkage.

􀀟 Management confirmed news reports that the company is in discussions with Hindustan Copper to invest in their mine, though nothing has been finalized yet.

􀀟 We have a Hold on National Aluminium with a target price of Rs365.