Complete SWOT Analysis of NALCO – The Largest Integrated Bauxite Manufacturer

Quick Stats on NALCO

Founder	Sridhar Patra
Year Founded	1981
Origin	Bhubaneswar, Odisha, India
No. of Employees	6,500+
Company Type	Public
Market Cap	Rs 21,194.73 Crore (2022)
Annual Revenue	Rs 2378 Crore (2021)
Net Income/ Profit	Rs 240 Crore (2021)

 

Products of NALCO

Some products offered by National Aluminium Company are:

• Bauxite
• Aluminium
• Alumina Hydrate
• Rolled Product Unit
• Power Plant
• Solar Power
• Wind Power

Competitors of NALCO

NALCO’s top five major competitors are: 

• Globus Corporation Ltd.
• Hindalco Industries Ltd.
• Maan Aluminium Ltd.
• Mankasia Aluminium Company Ltd.
• MMP Industries Ltd. 

Now that we have understood the company’s core products and services, let’s dive deep into the SWOT analysis of NALCO.

SWOT Analysis of NALCO

SWOT analysis is a study which is undertaken by the majority of companies to determine their core strengths, weaknesses, opportunities and threats. It is a framework that is used to evaluate a company’s competitive position which later helps in strategic planning. 

SWOT analysis can be conducted by any popular brand or any brand which is still new in the market can make use of this template to evaluate internal and external variables that might influence the brand authority and market development.

Below is a step-by-step detailed guide to help you with the SWOT analysis of NALCO.

Strengths of NALCO

The strength of a company is something that helps the company to grow in the long run and also helps to earn maximum profits with their full use of resources efficiently.

• Essential Goods Producer: NALCO produces Bauxite & Aluminium which is a major raw material for refractory bricks, abrasive, cement, steel, and petroleum. The product ensures never-ending sales and increasing revenue.
• Strong Performers in the Market: The company has a rating of its stocks more than 50-55 across the durability, valuation, and momentum (DVM). The company being under government can give profits in future.
• Huge Power Producer: NALCO  is one of the biggest power producers in the nation. NALCO has already commissioned 198 MW wind power plants and 50 MW wind power plants are further in pipeline, making NALCO the highest producer of renewable energy among PSUs.
• Quality of Metal Production: NALCO maintains its production much more efficiently than its competitors by which it can produce metal of the perfect quality.
• Skilled Employees: Their staff contributes significantly to the success of NALCO. They want to attract and retain talented people in their company and support them in their development.
• Code of Conduct: NALCO believes that the well-being of everyone is everything. This is in their core value of “respect” for individuals and the environment. NALCO directs its investment in three areas including Agriculture/Animal Husbandry, Health Care (Primary) and Education.
• Sustainability: NALCO ensures environmental stewardship including energy and water efficiency, waste management, renewable energy and greener manufacturing processes and technologies. The company is driven by the spirit of innovation and is continuously focusing on sustainable products and packaging innovations.
• Brand Reputation: NALCO has been in the business of producing metal, aluminium, power, and rolled products for a large number of years. Also, with the variety of products and services it provides, it is established as a leader in the industry. This helps the corporation to gain a reputation and get recognized easily.
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• Dealer Community: NALCO has built a very strong relationship with its dealers that not only helps in supplying the products but also promotes the company’s core products and training.
• Financial Position: NALCO has a very strong financial position in the market with consecutive profits over the years along with accumulated profit reserves which can be utilised for future expenditures or marketing activities.

Weaknesses of NALCO

The weaknesses are a major drawback that stops the organisation from performing at its optimum level. They are the areas in which businesses can make improvements. The major drawbacks are as follows:

• Scattered Plant Sites: Some of the plant sites of NALCO are scattered and do affect the production. NALCO can make production much more efficient if it maintains the sites properly. 
• Depends on LME Quotes: All the prices of metals are dependent on the London Metal Exchange (LME) quotes.
• Research and Development: NALCO has a good share of expenditure on the research and development department but it is spending way less than a few of the players within the industry which have benefitted as a result of their innovative products.
• Diversity in the Workforce: The local workers contribute to the majority of the workforce at NALCO making it difficult for outsiders to adjust and hence resulting in the loss of talent.
• High Employee Turnover Rates: NALCO has a very high employee turnover rate as compared to its competitors which means it spends a lot on training activities as employees keep leaving and joining.
• Need to Invest More in New Technologies: According to the country’s scale of expansion and the geographical areas NALCO needs to invest more money in technology to integrate the processes across the board. Currently, the investment in technology is not on par with the vision of the company.
• Limited Success Across the Core Business: Although NALCO is one of the leading organisations in its industry it faces challenges in moving to other product segments with its present culture.

Opportunities of NALCO

Opportunities are the favourable external factors that may give the organisation a competitive advantage over others. The opportunities of NALCO are as follows:

• Social Media: Over the years the number of active users on social media channels has increased and with this NALCO can make use of its social media handles to promote its products, and interact with customers and even provide after-sale services.

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• Transport Industry: The transport industry has been booming and is expected to boom in the next few years as well which has resulted in more demand for NALCO products which is helpful for NALCO to scale its business.
• Globalisation: Increased globalisation doesn’t restrict NALCO anymore to conducting activities in its own country which can act as an opportunity to extend operation in other countries and thus enter new markets and unleash the potentials of other new markets.
• Population: The population has been growing and is expected to grow at a positive rate in the upcoming years. This is beneficial for Nordea as there will be an increase in the number of potential customers that it can target.
• Expansion to Other Global Markets: The company is planning to expand its international activities with a particular focus on Asia. This serves them as an opportunity to acquire a new customer base.

Threats of NALCO

Threats are those factors that have the potential to provide harm to the organisation in any form. The threats of NALCO are as follows:

• Instability of the LME Prices: As we discussed earlier the NALCO is highly dependent on the prices of the London Metal Exchange (LME). It can be a threat to the company as the prices can fluctuate at any time and can make high losses to the company.
• High Task Rate: The sale of the company can affect if a high task rate is imposed on the metal and it will result in price maximisation of the products.
• Dumping of the metal at low cost by the European countries: If the European countries dump metal at low cost then the value of the metal will decline heavily and it can harm the market of the companies like the NALCO.
• Competitors Catching up with Product Development: The growth of the mining sector has produced many competitors to NALCO and they have been catching up with the market trends very gracefully. This can be a threat to the future of the company.
• Government & Environmental Regulations: The government has slightly different and more strict laws for the mining industry and to maintain their control over the consumption of natural resources. While on the other hand organisations concerned about the environment also have their eyes on the mining industry due to its threat to natural resources and the environment.

This ends our complete SWOT analysis of NALCO. Let us conclude our learning below.