National Aluminium Company Ltd

Dear Members,

Your Directors have pleasure in presenting the 29th Annual Report of your Companytogether with the audited statement of accounts and Auditors' Report thereon for thefinancial year 2009-10.

PERFORMANCE HIGHLIGHTS

You will be happy to know that all the production Units of your Company have recordedthe highest ever production since inception with respect to Bauxite, Alumina Hydrate, CastMetal and Power. Mines, Refinery, Smelter and CPP have achieved 101.64%, 101.05%, 99.88%and 88.33% capacity utilization respectively. Production achieved during the year underreview vis-a-vis the previous year is given below:

MARKETING

You will be pleased to know that your Company achieved the highest ever sale of4,35,979 MT metal as against sale of 3,53,589 MT metal during the previous financial year.This comprises of 2,89,031 MT, the highest ever domestic sale of metal surpassing theprevious best of 2,71,274 MT achieved in 2008-09 and the highest ever export sale of1,46,948 MT against the previous best of 1,32,730 MT achieved in 2004-05. The realizationfrom sale was however low due to recessionary conditions prevailing during most part ofthe year.

In order to improve margins, your Company has been putting thrust on sale of valueadded products. The sale of billets, wire rods and rolled products during the year underreport have been the highest-ever surpassing the previous best.

You will be pleased to know that as a part of e-commerce efforts, your Company adoptede-tendering procedure for export of Aluminium metal and Calcined Alumina during the yearunder report.

Your Company achieved a total chemical sale of 7,51,410 MT (including Calcined AluminaExport of 7,02,554 MT) during the year compared to 8,93,332 MT (including Calcined Aluminaexport of 8,51,886 MT) during the previous year. The reduction in sale of Alumina was dueto utilization of more quantity of Calcined Alumina at the expanded Smelter Plant. Thedomestic sale of Chemicals at 45,951 MT was the highest ever achieved, surpassing theprevious best of 36,695 MT achieved in 2008-09.

The sale of 7,094 MT Special Grade Alumina was the highest surpassing the previous highof 4,769 MT achieved in 2008-09. The sale of Special Grade Hydrate at 1 2,815 MT was thehighest ever sale surpassing the previous best of 1 1,670 MT achieved during 2007-08.

FINANCE

Your Company posted a lower total income of Rs. 5,548 crore in the year under report,as against Rs. 5,631 crore during the previous year. Profit After Tax for the year standsat Rs. 81 4 crore, as against Rs. 1,272 crore in the previous year. The decline in netprofit during the year compared to previous year was due to combined effect of lower salesrealization, reduced earnings from investment of surplus funds and increase in operatingcost. Your Company has recorded higher export earning of Rs. 2,209 crore during the yearas against Rs. 2,071 crore achieved during the previous year.

The summarized financial results for the year under report vis-a-vis previous year arefurnished below:

DIVIDEND AND APPROPRIATIONS

Your Company had paid an interim dividend of Rs. 1.50 per share (1 5%) in March, 201 0.The Board of Directors of your Company have recommended a final dividend of Rs. 1.00 pershare (1 0%) making aggregate of Rs. 2.50 per share (25%) for the year under report asagainst Rs. 5.00 per share (50%) paid for the year 2008-09. Your Directors haverecommended a lower rate of dividend keeping in view the requirement of funds for thegrowth projects under consideration. The final dividend will be paid after your approval.Your Directors have also proposed to transfer Rs. 630 crore to General Reserve Accountfrom the profits of the year under review as against Rs. 900 crore transferred in theprevious year.

PRESIDENTIAL DIRECTIVES

Your Company continued its efforts to implement the Presidential Directives onrecruitment/promotion of SC/ST candidates. Your Company is also complying with theprovisions of the Persons with Disabilities Act, 1995.

Out of 7,467 employees (including Trainees) on your Company's roll as on the last dayof the year under report, there were 1,186(15.88%) SCs, 1,307(17.50%) STs, 716(9.59%) OBCsand 73 (0.98%) persons with Disabilities. Every third employee in the Company belongseither to SC or ST category. The total number of lady employees in the organization as on31.03.2010 was 339.

Your Company received a Presidential Directive during the year in respect of revisionof salary package of executives and directors. The same has been duly complied with.

INDUSTRIAL RELATIONS

You will be pleased to know that the overall Industrial Relations (IR) climate in yourCompany remained cordial and conducive through out the year, which helped the organizationin maintaining a zero mandays loss record on account of IR problems. Belying theapprehensions in the minds of people on aftermath of Naxal attack at Panchpatmali BauxiteMines last year, your Company bounced back to normalcy very soon by virtue of an amicableunderstanding with the employees of Mines. The time tested policy of participativemanagement helped and saw the culmination of several nagging issues through bipartitediscussions.

VISIT OF NATIONAL COMMISSION FOR SCHEDULED CASTES

Hon'ble National Commission for Scheduled Castes visited the Corporate Office of theCompany at Bhubaneswar and held discussions with senior officials as well asrepresentatives of various SC/ST associations of your Company on 9th October, 2009.

COPU RECOMMENDATIONS

The Hon'ble Committee on Public Undertakings (COPU) examined the working of yourCompany during the year. The Hon'ble Committee has presented its report inter-aliaconsisting of 1 8 recommendations to the Parliament during April, 2010. Your Company istaking necessary action on the recommendations of the Hon'ble Committee.

AWARDS & RECOGNITIONS

Receipt of various awards during the year as detailed below stands ample testimony forthe excellent performance of your Company in various fields:

• EEPC Gold Trophy, as 'Top Exporter' 2006-07 in the Large Enterprise Category,for outstanding export performance.

• All India Export Award of EEPC as the 'Star Performer' in large enterprisecategory, for the year 2007-08.

• 'Best Environment Care' and 'Best Workplace Practices' at Think OdishaLeadership Awards function, organized by The Times of India & Tefla's.

• Status of 'Premier Trading House' as per Foreign Trade Policy 2009-10 byMinistry of Commerce, Govt. of India for the period 2009-14.

• 'Organisation with innovative HR Practices' Award at World HRD Congress atMumbai.

• Alumina Refinery bagged the first Runner-up award from CII, Orissa State Centrefor best Safety, Health & Environment practices and also the Pollution ControlExcellence Award 2009 from Orissa State Pollution Control Board.

• Bauxite Mines bagged 1st prize in Reclamation & Rehabilitation from IndianBureau of Mines (IBM) at Mine Environment and Mineral Conservation Week.

• Bauxite Mines also bagged the following prizes from Director General of MinesSafety (DGMS) for sound mining practices and for safe mining performance.

a. 1st Prize in Training & Safety Performance.

b. 1st Prize in Haul Roads and general lighting.

c. 1st Prize in Compliance of 10th Safety Conference Recommendation.

d. 2nd Prize in Open Cast working.

e. 2nd Prize in Maintenance of Crusher & Conveyor System.

f. 2nd Prize in First Aid, Welfare & Occupational Health and Safety facilities.

GROWTH PLANS EXPANSION

You will be pleased to know that commissioning of all the 240 Pots under second phaseexpansion of Smelter was completed by December, 2009. Similarly, the 9th Unit of CPP undersecond phase expansion was commissioned during August, 2009. The 10th Unit of CPP islikely to be commissioned by end August, 2010. Second phase of Alumina Refinery to enhancethe capacity from 1.575 Million Tonnes to 2.1 Million Tonnes is expected to be completedby January, 2011.

The present capacity of the various project segments and the capacity after ongoing 2ndphase expansion is given below:

Of the approved project cost of Rs. 4,402 crore, financial commitments of Rs. 4,173crore had been made upto 31.07.2010.

UP-GRADATION OF 4TH STREAM OF REFINERY

You will be happy to know that your Company's proposal for upgradation of 4th Stream ofRefinery to upgrade total capacity from 2.1 Million TPY to 2.275 Million TPY got a furtherboost with environmental clearance by MOEF during December, 2009. The upgradation islikely to be completed by March, 2012.

UPGRADATION OF SMELTER POTLINE FROM 180 KA TO 220 KA

You will be pleased to know that your Company has embarked on a plan to enhance theamperage in the pot lines from 180 KA to 220 KA at an estimated investment of Rs. 1,500crore for both Smelter and Captive Power Plant. On completion of the project, the metalproduction will increase by about 1,00,000 MT per annum. The project is scheduled to becompleted by 2017.

UTKAL - E COAL BLOCK

Your Company has been allotted 'UTKAL-E' Coal Block, having a reserve of around 70million ton by the Government of India for its 9^th and 10^th units atCaptive Power Plant.

Mining of coal from the Utkal-E Block is scheduled to commence from June, 2012, at acapital outlay of Rs. 280 crore.

MOU PERFORMANCE

Based on results, your Company has been rated 'Very Good' under Memorandum ofUnderstanding (MOU) signed with Government of India for the year 2009-10.

IMPLEMENTATION OF OFFICIAL LANGUAGE POLICY

Your Company continued its efforts for the progressive use of official language in allits Offices. In that direction the following steps were taken during the year underreport:

• Your Company continued to issue Circulars, Office Orders, Memoranda etc. inbilingual form i.e. in Hindi & English. Letters received in Hindi were answered inHindi.

• To promote use of Official Language among employees, Hindi Teaching Programmewas implemented. Employees from Non-Hindi speaking areas were nominated for Praveen &Pragya courses under Hindi Teaching Scheme. After passing the examinations, incentives andcash awards were given as per the rules.

• Six Hindi workshops were organized during the year under report to enhance theworking capabilities of employees who had acquired working knowledge in Hindi.

• To propagate awareness among employees for use of Hindi, Hindi Day and HindiWeek were celebrated at all the units of your Company during the year and manycompetitions for employees of Hindi speaking areas, Non-Hindi speaking areas and studentswere organised and prizes given.

• Official Language Implementation Committee meetings were organised regularly forreview of implementation of Hindi.

VIGILANCE

As a part of preventive vigilance and to make administration efficient, effective,clean and free of corruption, multifaceted strategies like surprise checks, sample tests,regular inspections, Chief Technical Examiner (CTE) type intensive examination of worksand contracts were continued during the year under report. To reduce the possibilities ofcorruption, your Company has implemented e-tendering, e-payments, e-auctioning etc. WithEnterprise Resource Planning (ERP) going live, the system is likely to become more robust.For creating awareness among employees, Vigilance Awareness Week was organised inNovember, 2009 at all the units and regional offices of your Company. Nine trainingsessions were organized at different units of the organization for sensitizing employeeson the evil effects of corruption.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING AND OUTGO

You will be pleased to note that your Company's in-house R&D Units located atM&R Complex, Damanjodi and S&P Complex, Angul have been recognized by theDepartment of Scientific & Industrial Research (DSIR), Ministry of Science &Technology, Govt. of India.

The particulars relating to Conservation of Energy, Technology Absorption, ForeignExchange Earnings and Outgo, as required to be disclosed under Section 217(1)(e) of theCompanies Act, 1956 read with the Companies (Disclosure of Particulars in the Report ofBoard of Directors) Rules, 1988 are provided in the Annexure-1 to this report.

PARTICULARS OF EMPLOYEES

Having regard to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956,read with the Companies (Particulars of Employees) Rules, 1975 as amended, the AnnualReport of your Company excluding the information on employees in receipt of remunerationof Rs. 2,00,000 per month or Rs. 24,00,000 per annum is being sent to all the members ofyour Company and others entitled thereto. Any member interested in obtaining suchparticulars may write to the Company Secretary at the Registered Office of your Company.

LISTING IN STOCK EXCHANGES

The equity shares of your Company continued to be listed on Bombay Stock ExchangeLimited, Mumbai (BSE) and National Stock Exchange of India Limited (NSE). The listing feehas been paid to these Stock Exchanges.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to provisions of Section 217(2AA) of the Companies Act, 1956, Directors ofyour Company hereby confirm:

• that in the preparation of the annual accounts, the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures;

• that the directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit of the Company for that period;

• that the directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of Companies Act, 1956 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities and

• that the directors have prepared the annual accounts on a going concern basis.

CORPORATE GOVERNANCE

Your Company believes that to be a successful company, it must maintain globalstandards of corporate conduct towards all its stakeholders. Your Company believes thatthe principles of fairness, transparency and accountability are the cornerstones for goodgovernance. It is the Company's endeavour to continue to achieve the highest levels ofgovernance and to benchmark itself with the best governed companies in the similar trade.

A report on Corporate Governance is placed at Annexure-ll to this report. Like previousyears, as a part of good Corporate Governance practice, your Company has voluntarily gotthe Secretarial Audit carried out for the year 2009-10 and the report of the SecretarialAuditors is placed at Annexure-llI to this report.

MANAGEMENT DISCUSSION & ANALYSIS REPORT

Management Discussion & Analysis report is placed at Annexure-IV to this report.

C&AG COMMENTS

Comments of the Comptroller and Auditor General of India on the Accounts for the yearended March 31, 2010, are enclosed.

C&AG COMMENTS

Comments of the Comptroller and Auditor General of India on the Accounts for the yearended March 31, 2010, are enclosed.

PUBLIC DEPOSITS

Your Company has not accepted or renewed any public deposits during the year underreview and as such no amount on account of principal or interest on public deposits wasoutstanding as on the date of the Balance Sheet.

AUDITORS

The details of auditors appointed during the year under review are given below:

DIRECTORS

The changes that took place in the Board of Directors of your Company since the lastreport are given below:

Appointment:

• Shri P K Padhi was appointed as Director (Projects &Technical) with effectfrom 03.09.2009.

• Shri A K Srivastava was appointed as Chairman-cum-Managing Director with effectfrom 01.10.2009.

• Shri Ansuman Das was appointed as Director (Commercial) with effect from28.10.2009.

• Shri Sundeep Kumar Nayak, IAS, Joint Secretary, Ministry of Mines was appointedas Director with effect from 07.01.2010.

Cessation:

• The tenure of Shri C R Pradhan as Chairman-cum-Managing Director and Shri K KMallick as Director (Commercial) ended on 30.09.2009 on attaining the age ofsuperannuation.

• Shri V K Thakral, IAS ceased to be a Director with effect from 07. 01.2010.

• Shri S. Vijay Kuamr, IAS ceased to be a Director with effect from 31.07.2010.

Your Directors wish to place on record their appreciation for the valuable servicesrendered by S/Shri C R Pradhan, K K Mallick, V K Thakral and S. Vijay Kumar during theirtenure on the Board of your Company.

ACKNOWLEDGEMENT

Your Directors acknowledge with deep sense of appreciation, the co-operation, supportand guidance received from various Ministries of the Government of India, particularlyMinistry of Mines. Your Directors also express their sincere thanks to the Government ofOdisha, Indian Railways, Mahanadi Coal Fields and other Government agencies.

Your Directors also place on record their appreciation for the shareholders, variousBanks and Financial Institutions for the confidence reposed by them in your Company. TheBoard also appreciates the contribution of customers, vendors, solicitors and businessassociates during the year and look forward to continuance of this mutually supportiverelationship in future. Your Directors also acknowledge the constructive suggestionsreceived from the Government and the Statutory Auditors.

Your Directors also wish to place on record their appreciation for the untiring effortsand contributions made by the employees at all levels to ensure that the Company continuesto grow and excel.

For and on behalf of Board of Directors

A. CONSERVATION OF ENERGY

Various energy conservation measures that have been adopted for optimal utilization ofenergy resources in different units of the Company during the period under review arenoted as under:

Bauxite Mines

• Replacement of DC drives of Acceleration Conveyor & Apron Feeder-1 :Calculated energy saving is 95,710 KWH per year having financial benefit of Rs. 4.45 Lakhannually.

• Modifications in two Komatsu Loaders (No. - 17& 18)to reduce fuelconsumption: Turbo Charger, Fuel Pump &Acceleration Pedals were changed in 2007 &benefit still continues. Calculated saving is 29.58 KL of HSD having financial benefit ofRs. 09.17 Lakh annually.

• Radiators of HEMM top up with mineral water: Expected saving is 0.5% of HSDconsumption in each machine at Rs. 6.6 Lakh every year.

Alumina Refinery

Reduction in specific fuel oil consumption in Calcination:

• Regular and continuous operation of Hydrate bypass system.

• Maintaining the PTS in calcination for operation of fine hydrate bypass most ofthe time.

• Maintaining product LOI and BET at slightly higher side of the allowable rangealso helped in reduction in oil consumption.

• Improvement in specific Oil consumption: 0.03 Lt/MT of Calcined Alumina.

# Financial Benefits of Rs. 115 Lakh per year.

Reduction in specific coal consumption in hydrate circuit:

• Reduction in Specific steam consumption in process w.r.t hydrate production from2.08T/T.

• Improvement in Milling system output by regular classifier cleaning and otherproactive maintenance measures like time based replacement/ maintenance of critical spareparts like gearbox.

• Detailed inspection of PA fan impellers and replacement of inefficient impellersof PA fans during overhauling, thereby achieving adequate velocity profile of pulverizedcoal from Mill to furnace.

• Time based replacement of AH baskets which resulted in effective heat recoveryfrom flue gas to Air, and ultimately reduction in coal consumption.

• Improvement in specific coal consumption: 0.001 T/T of hydrate.

# Financial Benefits of Rs. 28 Lakh per year.

Optimizing, use of street lights

• 50% of street lights from Plant Main gate to Vejaput junction are off after11PM.

• 30% of street lights are put off after 11PM from Vejaput gate to Kantabausunigate and from Kantabausuni gate to Railway station.

• 1800 nos. of LEDs have been replaced in 11KV switchgear panel. Indication lampis 15W & LED is01W. Net energy saving is 14W.

• Saving in electrical energy consumption by 221 KWH.

# Financial Benefits of Rs. 5 Lakh per year.

Lubricants of Mill, PA fan, FD fan, BFP and Voith Couplings of ID fans were reusedafter centrifuging during boiler overhauling

• The coal mill Main oil tank requires 8 barrels of ENKLO 460. In both the millsof one boiler, total 16 barrels amounting to 3200 Lts. have been reused which was normallydiscarded for disposal after one year use only. This year this oil has been reused afternecessary conditioning through centrifuging in Boiler-3 and 4 during overhaul.

• The PA and FD fans of Boiler-4 have lubricating system with tank andrecirculation which also requires a change every year. But this year the same oil has beenreused after necessary filtration and centrifuging.

• Similarly hydro coupling oil in Voith coupling of ID fans and BFP of Boiler-4also reused after centrifuging during overhaul.

• Saving in Lub oil consumption by 8200 Lts.

# Financial Benefits of Rs. 9.87 Lakh per year.

Optimize operating voltage in identified HT transformers (CII Project No-34):

• Reduction of operating voltage in HT transformers (11/6.6KV) from normal Tap T4)to Reduced Tap (T3), i.e 2.5% less in all transformers.

• Annual saving of electrical energy/ HFO (in Kwh/kl) is 526631 KWH.

# Financial Benefits per year is Rs. 10.53 Lacs (@ Rs. 2.00 per unit )

Reduce the operating voltage of lighting circuit in the lighting transformers (CIIProject No-35):

• Reduction of operating voltage of light feeders by reduction of off-load tap oflighting transformers in 220 KV conversion S/s & various remote substations.

• Annual saving of electrical energy/ HFO (in Kwh/kl) is 169725 KWH.

# Financial Benefits per year is Rs. 3.39 Lacs (@ Rs. 2.00 per unit).

Re-set the minimum fuel flowing to Ingot casting machines furnace in Cast House-B.

• ICM furnaces (four in number) temperature setting has been reduced from 7400C to7300 C with 100 % auto control.

• Complete stoppage of oil flow when the desired temp. is achieved from earlierpractice of a minimal opening (19 %) of both burners.

• The sp. HFO Consumption in Cast House-B has been reduced from 44.150 Lt/Mt. to38.03 Lt/MT.

# Financial Benefits per year Rs. 91.7 Lacs (@ HFO landing price Rs. 15/lt).

Optimize the temperature setting of furnaces in Cast House-A.

• ICM furnaces temperature setting has been reduced from 7400 C to 7300 C.

• WRM furnaces temperature setting has been reduced from 7800 C to 7600 C with theinstallation of PID Loop controlled furnace firing in furnaces 5,6,7,8.

• Launder cover for all the launders has been provided to arrest the heat losses .

• Improved technology of AIR SLIP in Billet production was implemented to enhancethe productivity.

• The sp. HFO consumption for product-mix of Cast House-A has been reduced from54.457 Lt/ Mt to 47.852 Lt/ MT.

# Financial Benefits per year is Rs. 182 Lacs (@ HFO landing price Rs. 15/Lt)

Captive Power Plant

• By providing energy efficient coating on the impeller and inner casing of RCWpump, the specific power consumption reduced from 0.1066KW/ M³ to 0.0869KW/ M³. Considering flow of 10500 M³/Hr power saving is 207kw/Hr. With 300 daysoperation energy saving is 489320 KWH having financial benefit of Rs. 20.47 Lakh per year(Cost of Power taken as Rs. 1.77 per KWh).

• Replacement of 450 Nos, 125 Watt MV lamp with 70 Watt SV lamp in boiler#4:Saving per fitting is about 55 watt. Saving per year is 108405 KWH having financialbenefit of Rs. 1.92 Lakh per year (Cost of Power taken as Rs. 1.77 per KWH).

• Replacement of normal fluorescent light fitting (2 Nos tubes and 2 chokes withpower consumption of 110 watts) with T-5 fitting and electronic ballast (power consumption66 watts): Saving per fitting is 44 Watt. Saving per year is 19272 KWH, having financialbenefit of Rs. 0.34 Lakh per year (Cost of Power taken as Rs. 1.77 per KWH).

• Replacement of normal choke with electronic ballast. Power saving is 10 watt perfitting. Saving per year is17520 KWH, having financial benefit of Rs. 0.31 Lakh per year(Cost of Power taken as Rs. 1.77 per KWH).

• On line testing (Trevi Test) of Safety Valves of boiler drum & main steamline is done by simulation procedure which reduced steam consumption. This has been donefor unit #1, #3, #4, #5 & #7. Reduction in fuel oil consumption per unit/test is15KLhaving financial benefit of Rs. 3.75 Lakh.

• CWPH fore bay & Ash water fore bay Level indication has been provided in theDM Plant control room. This has avoided the over flow of water from the fore bays andsaved the pump running hours.

• Running hour counters have been provided in Compressors drives to know the exactrunning hours. This has helped to identify if there is leakage of air from instruments.Once these leakages are attended there is saving in energy.

• Auto drain traps have been provided in the instrument air lines for drainingmoisture to achieve proper dryness of instrument air. This has saved the trip out arisingout of failure of instruments. This has indirectly saved man power & energy losscaused due to unit trip out.

• Earlier units were tripping due to equipment failure on account of abnormaltemperature rise in bearing and winding of HT drives. In order to avoid such trip outsramp has been provided in software for tracking the temperature rise. This modificationhas saved Unit trip outs and there by saving energy.

• Electronics speed regulation has been provided in the plough feeders in New CHPto avoid spillage of materials & chocking of belts. Spillage of coal has been avoidedresulting in power saving.

Total Power and Fuel consumption and consumption per unit of production is given inForm-A.

A. Power and Fuel Consumption:

B. Consumption per unit of production

RESEARCH & DEVELOPMENT (R&D)

1. Specific areas in which R&D Activities carried out by the Company are:

(a) Alumina Plant

- Development of RP analyser control system to replace the imported control system.

- Studies related to M2M Technology for recovering alumina from settler underflow mud

- Study on the effect of lime from various sources on the quantity and quality ofaluminate liquor output and CaO content in the product.

- Studies to establish the effectiveness of Green liquor filter aids on the clarity andspecific filtration rate of aluminate liquor

- Development of a process for preparation of high temperature resistant resin forsodic condensate polishing.

- Studies related to alternate flocculant and defoamer development.

- Utilisation of flyash to make quick settling cement.

- Neutralisation of Sodic condensate for economically utilizing the availablecondensate.

- Development of an innovative process for preparation of sodium aluminate from aluminahydrate.

- Green liquor filter aid (GLFA) plant scale trials were carried out.

(b) Smelter Plant

- Plant scale trial with anodes of deeper stub hole depth (+20mm) with and without 10mmincreased pin length to reduce pin to carbon voltage drop.

- Metallographic studies of cast products for quality improvement.

- Inclusion analysis of molten metal.

- Vendor development for cathode block.

- Plant scale trial with HFO additives for reduction in specific oil consumption.

- Trial with Colloidal graphite coating in place of rapeseed oil in ICM.

- Mathematical Modeling:

- Simulation studies at different amperage levels.

- Simulation study for optimum metal height at different amperage.

- Simulation studies to predict pin & clad temperatures at various anodes coverheights.

- Simulation of Billet casting and Wire rod casting process.

- Anode bench scale studies:

- Impact of varying percentage of pitch on anode quality.

- Impact of permuting cycle in baking furnace on anode quality.

- Bench scale studies on utilization of rejected ramming paste in anode pastecompleted.

- Bench scale studies on blending of fines of two types coke completed.

- Characterisation of baked anodes for process monitoring.

- Testing of samples of ramming paste with the anode bench scale set up carried out.

- Revision of specification of c.p.coke proposed. Discussions were held with theexisting coke suppliers to improve the quality of supplied material & were appraisedabout quality implications & future quality requirements.

- Large scale plant trial of additive in anode manufacturing to improve oxidationbehaviour successful.

- Heat balance study carried out in Anode baking furnace.

- Pots started with alternate supply of cathode blocks, reprocessed rejected paste,partially damaged cathode blocks & indigenously developed ramming paste are beingmonitored. During the year, 3 pots have been lined with indigenously developed rammingpaste.

- Laboratory scale trial for using SPL Carbon portion for electrode paste manufacturingis successful. In-house study carried out to optimize boric acid addition in pots.

- Monitoring of the improvement in anode quality due to improvement in Grain to sandratio.

- Plant scale trial for utilization of rejected ramming paste in anode carbon matrixcompleted & found successful. (B) Collaborative R&D Activities

- Pilot scale development of constructional blocks, bricks, chips, tiles and lightweight aggregate from Red Mud in collaboration with JNARDDC, Nagpur.

- Establishing empirical relationship between physical properties of alumina throughcomputer simulation and modeling in collaboration with SIT, BBSR and its implementation inplant.

- Pilot scale optimization of extraction of alumina from PLK (partially lateratisedkhondalite), collaborative project with MESIS, Russia.

- Preparation and certification of reference material for selected ores incollaboration with JNARDDC, Nagpur. Project completed and is being implemented.

- Plasma smelting of Red mud for production of Pig /Cast iron and Alumina rich slag incollaboration with IMMT, BBSR.

- Infra Red Thermography studies and Estimation of Scaling Height in precipitators atRefinery.

- Refinery collaborative project with JNARDDC, Nagpur. Project findings are beingimplemented.

- Evaluation of grain refining efficiency of commercially available grain refiner alloyin collaboration with JNARDDC, Nagpur. Project completed.

- Preparation of TEFR for extraction of Nickel from chromite over burden. The IRR wasnot found to be encouraging, hence project closed.

- Dev. of high speed extrusion alloys for Indian Industries in collaboration withJNARDDC, Nagpur.

- Characterisation of various casting & Rolling Defects of Strip Cast AluminiumAlloys at NALCO (RPU) in collaboration with JNARDDC, Nagpur.

- Study of effect of alumina quality on solubility of electrolytic bath incollaboration with JNARDDC, Nagpur.

- Techniques & tools for Per fluoro carbon (PFC) measurements in aluminiumelectrolysis cells in collaboration with JNARDDC, Nagpur.

- Preparation of Low Ferric Alum from low grade aluminium dross in collaboration withJNARDDC, Nagpur.

- Development of probe for liquidus temperature determination for electrolysis bath incollaboration with JNARDDC, Nagpur.

- Development of Heat Treatment Process for Destruction of Toxic Cyanide and Recoveryof Valuables. (Sodium, Fluorides, etc.) from Spent Pot-Linings Materials (SPL) incollaboration with JNARDDC, Nagpur.

- Development of nano alumina and aluminium composite material for Automobileapplication in collaboration with IIT, Kharagpur.

- Development of Metal matrix composites based on NALCO's Al-using in-situ Al2O3-SiC-C& Al2O3-SiC-SiO2 composite ceramic powder in collaboration with IMMT, Bhubaneswar.

- Increasing Productivity of ATH using additives in collaboration with IMMT,Bhubaneswar.

2. Benefits Derived as a Result of The Above R&D (In-House & Collaborative):

- Use of filter aids results in improved the specific filtration rate and henceproduction as well as reducing lime consumption.

- Patent has been filed for the high temperature resin development process and is undercommercialization. Use of the high temperature resin results in conservation of water andenergy.

- Use of high efficiency flocculant results in better control on mud washing.

- Sodic Condensate neutralization in addition to environmental protection helps inenergy conservation and soda recovery from red mud pond water.

- Reduction in the cost of production of Zeolite has been addressed.

- Fly ash utilization has been increased.

- Implementation of higher grain to sand ratio in GAP2 has resulted in improvement ofanode density by .005- .01 gm/cc.

- Usage of reprocessed rejected paste has helped in a saving of Approx 27 lakh for 10pots lined with this material.

- Trials with indigenously developed ramming paste will help in development ofindigenous vendors. Lining of 3 pots with such paste will result in saving of Rs 20000/Thot metal, produced from these 3 pots.

- Studies conducted in anode bench scale plant and regular characterizations of anodeshave helped in process and anode quality improvements.

- Optimisation of Boric acid addition in pots has resulted in reduced consumption ofboric acid to the tune of approx. 5 MT/month i.e. saving of approx. Rs. 2 lakh/month.

- Higher stub hole depth anodes reduces voltage drop across anode carbon to pin.

- Inclusion analysis and metallographic studies improve product quality.

- Mathematical modeling enhances process understanding and optimization of processparameters.

3. Future Plan of Action:

- Setting up of Nalco Research & Technology Centre (NRTC) at BBSR. (Implementationin progress)

- Pilot plant / Demonstration unit for production of construction bricks from Red mudfor commercialization.

- Commercialization of few R&D processes.

- Utilisation of Fly ash in Tiles manufacturing (developing a feasible process).

- Implementation of Bayer process Simulation package for better process control andreduction in Cost of production.

- Salt removal studies to prevent scale formation in equipments and pipelines.

- Use of high Chrome grinding media and liner in Ball Mills for improved availabilityof mills and higher grinding capacity.

New Projects:

- Developing Green Liquor Filtration Aid.

- Implementation of high resistance resin for condensate recovery.

- Optimisation of quantity of butts in anode matrix

- Trials with higher percentage of AlF3 in pots to optimise pot parameters.

- Plant level trials by blending of different types of cokes.

- Trial with Indigenous Tepid ramming paste in pots

4. Expenditure on R&D:

(a) M&R Complex, Damanjodi:

(b) Smelter Plant, Angul:

(c) Captive Power Plant, Angul:

M&R Complex, Damanjodi:

Smelter Plant, Angul:

C. FOREIGN EXCHANGE EARNINGS AND OUTGO (ON CASH BASIS)

The foreign exchange earnings of your Company for the year under review is Rs. 2,075.04crore as against Rs. 2,097.32 crore in the previous year.

The foreign exchange outgo of your Company for the year 2009-2010is Rs. 443.23 crore asagainst Rs. 645.62 crore in the previous year.

Philosophy

Corporate Governance is a process that enables the Company to operate in a systematicmanner to meet its ethical, legal and business expectations and at the same time fulfilsits social responsibilities. The core value of Corporate Governance lies in integrity,transparency, high degree of disclosures, emphasis on product quality, adopting bestbusiness practices, making distinction between corporate ethics and personal convenience.

In NALCO, Corporate Governance means a set process to leverage the resources at itsdisposal and create an environment for growth and development of human resources. It notonly believes in earning the investors' and stakeholders' trust but also focuses onretaining the same on sustainable basis. The Board exercises its fiduciary role towardsthe Company with effective accountability, respect for law, maintaining CorporateGovernance standard beyond law, putting the system in place for planning, budget, internalcontrols, risk management, communication policy on various facets of Company's operations.It uses Corporate Governance as a tool for generating trust and goodwill among businesspartners, customers and investors and to earn respect from the society at large.

2.0 Board of Directors

Composition

The Company maintains optimum combination of Executive and Non-Executive (Independent)Directors. As on 31.03.2010, the Board consisted of 16 Directors out of which 6 were wholetime directors including the Chairman-cum-Managing Director. Besides, there were 2Non-Executive (non independent) directors nominated from the Government and 8 IndependentDirectors. Half of the strength of the Board was thus comprised of Independent Directors.

All Directors furnish statement individually about the committee positions they occupyin other Companies and notify any changes in it. None of the Directors on the Board ismember of more than 10 Committees or is acting as Chairman of more than 5 Committees.

A. Institutionalised decision making process

(i) The Board is responsible for setting the policy and planning all directions of theorganization and ensure processes are in place that will deliver the results. The wholetime directors manage the day-to-day affairs of the Company.

(ii) Board meetings are usually held at the Company's Registered office at Bhubaneswarand also at New Delhi.

(iii) Advance notice convening the Board meetings are given to all Directors.Sometimes, meetings with shorter notice are convened to meet urgent needs or in case ofexigencies, resolutions are passed by circulation.

(iv) All units/departments are informed well in advance about date of meeting so thatmatters at their end requiring discussion/approval/decision of the Board are communicatedto Company Secretary Department for including in the agenda for the meeting. Agenda itemsof confidential nature are placed on the table. In exceptional circumstances supplementaryitems on the agenda are placed on the table before the Board.

(v) The agenda papers are prepared by the departments and approved by the concernedfunctional director and CMD. Agenda items having financial implications are concurred byDirector (Finance) before they are put up to CMD for approval.

(vi) Members of the Board have complete access to all information and are free to callany senior official during the meeting for additional information/clarification on anyagenda item.

(vii) The Board is given presentation covering Production, Marketing, Finance, Businessdevelopments, Growth plans, Collaboration/Joint venture operations etc.

(viii) The information placed before the Board include:

- Annual operating plans and budgets and revisions therein.

- Capital Budgets and revisions.

- Quarterly results of the Company and of its business segments.

- Formation/reconstitution of Board Committees.

- Terms of reference of Board Committees.

- Minutes of meeting of Audit Committee and other Committees of the Board.

- Show cause, demand, prosecution notices and penalty notices of materially importantmatters.

- Fatal or serious accidents, dangerous occurrences, any material effluent or pollutionproblems.

- Any material default in financial obligations to and by the company, or substantialnon payment for goods sold by the company.

- Any issue, which involves possible public or product liability claims of substantialnature, including any judgment or order which, may have passed strictures on the conductof the company or taken an adverse view regarding another enterprise that can havenegative implications on the company.

- General notice of interest of Directors.

- Proposal for investments, mergers and acquisitions.

- Details of joint ventures, acquisitions and collaboration agreements.

- Sale of material nature, of investments, subsidiaries, assets, which is not in normalcourse of business.

- Non compliance of any regulatory, statutory or listing requirements and shareholdersservice such as non-payment of dividend, delay in share transfer etc.

- Wage negotiation and settlement, significant labour problems and their proposedsolutions.

- Brief on statutory developments, change in Government policies etc. with impactthereof.

B. Recording minutes of proceedings of Board and Committee meetings

The Company Secretary records the minutes of the proceedings of each Board/Committeemeeting. Draft minutes are circulated amongst all functional Directors of theBoard/Committee for their comments. Comments, if any, received from functional Directorsare incorporated in the minutes which are finally approved by the Chairman of the Board/Committee. These minutes are confirmed in the next Board/ Committee Meeting. Anyamendments suggested at the time of confirmation are given effect. The final minutes areentered in the Minutes Book within 30 days from conclusion of the meeting.

C. Post Meeting follow-up mechanism

The Guidelines for Board and Committee meetings facilitate an effective post meetingfollow-up, review and reporting process on the decisions taken by the Board and Committeesthereof. The Company Secretary intimates the Action Points arising out of deliberationduring the meeting to the concerned department heads and to the functional Directors. Theconcerned department head provides information to the Company Secretary with approval ofthe respective functional Directors on the action taken, which are placed in thesucceeding meeting for information of the Board/Committee, after taking approval of CMD.

D. Compliance

Nodal officers have been identified in each department to ensure adherence to all theapplicable provisions of laws, rules, guidelines etc. The nodal officers furnish a monthlyCompliance report to Company Secretary confirming adherence to all the applicable laws,rules, guidelines pertaining to their departments. Company Secretary compiles all datarelating to compliance of all laws, non compliance, if any, and reasons thereof and placesthe same before the Board for information and guidance.

Board Meetings

The Board met 9 times during the year ended March 31, 2010. The minimum and maximumtime gap between any two Board meetings was 16 days and 57 days respectively. Details ofBoard meetings are as follows:

Directors' attendance at the Board Meetings, at the last Annual General Meeting, numberof directorships in other companies and membership in other committees etc. during theyear are as follows:

a. Whole time Directors

b. (i) Part - time official Directors (Non-independent)

b (ii) Part time non official (Independent) Directors

* As per clause 49 of the Listing Agreement, Membership/Chairmanship in only the AuditCommittee and Shareholders/ Investors' grievance Committee have been considered.

(1) Appointed w.e.f. 01.10.2009.

(2) Appointed w.e.f. 01.05.2009.

(3) Appointed w.e.f. 03.09.2009.

(4) Appointed w.e.f. 28.10.2009.

(5) Appointed as CMD w.e.f. 03.08.2009.Superannuated on 30.09.2009.

(6) Superannuated on 30.09.2009.

(Rs.) Superannuated on 30.04.2009.

(8) Ceased to be Director w.e.f. 07.01.2010.

(9) Appointed w.e.f. 07.01.2010.

Directors' Profile

The brief resume of Directors retiring by rotation and additional directors seekingappointment, nature of their expertise, names of Companies in which they holddirectorship, membership and their shareholding in their companies are provided in theNotice convening Annual General Meeting.

Stock Option details

The Company is in the process of implementing ESOP in terms of guidelines from theGovernment as part of Performance Related Pay (PRP) of executive remuneration. However, nostock option has been issued to Directors/employees during the year.

Training to Non-Executive Directors

The Company has initiated action for nominating the Independent Directors for training.

3.0 Board Committees

Depending on the business needs and legal requirements, the Board has constituted thefollowing Committees:

1. Audit Committee

2. Human Resource Committee

3. Technology Committee

4. Share Transfer Committee

5. Committee of Directors for sales

6. Committee of Directors for procurements

7. Investment Committee

8. Committee of Directors for consideration of unaudited results

9. Committee of Directors for reviewing court cases

10. Committee of Directors on Corporate Social Responsibility

11. Committee of Directors on Indonesia project

The above Committees of the Board have been constituted with specific responsibilitiesassigned to each of these Committees.

3.1 Audit Committee

The terms of reference of Audit Committee is derived from Section 292A of the CompaniesAct, 1956, guidelines set out in clause 49 of the Listing Agreement and guidelines onCorporate Governance for Central Public Sector Enterprise issued by Department of PublicEnterprise (DPE).

Audit Committee comprises of six independent directors and one non-executivenon-independent director as detailed below:

Independent Directors

Shri S.S. Sohoni - Chairman

Dr. A. Sahay

Shri K.S. Raju

Shri N.R. Mohanty

Maj. Gen.(Retd.) Samay Ram

Shri S.B. Mishra (w.e.f. 03.06.2009)

Non-Executice Non-independent Director

Shri Sundeep Kumar Nayak,IAS (w.e.f. 07.01.2010)

During the absence of Chairman in any meeting, any one of the independent directorspresent is elected as the chairman for the meeting.

Director (Finance), Statutory Auditors, Chief of Internal Audit and Cost Auditors arepermanent invitees to the meetings. Functional directors, Operational heads are invited tothe meetings on need basis. The Company Secretary acts as the Secretary of the AuditCommittee.

The role of the Audit Committee includes:

(i) Oversight of the Company's financial reporting process and the disclosure of itsfinancial information to ensure that the financial statement is correct, sufficient andcredible.

(ii) Recommending to the Board, the appointment, re-appointment and, if required, thereplacement or removal of the statutory auditors and the fixation of audit fees.

(iii) Approval of payment to statutory auditors for any other services rendered by thestatutory auditors.

(iv) Reviewing, with the management, the annual financial statements before submissionto the Board for approval, with particular reference to:

- Matters required to be included in the Director's Responsibility Statement to beincluded in the Board's report in terms of Clause (2AA) of Section 217of the CompaniesAct,1956.

- Changes, if any, in accounting policies and practices and reasons for the same.

- Major accounting entries involving estimates based on the exercise of judgment bymanagement.

- Significant adjustments made in the financial statements arising out of auditfindings.

- Compliance with listing and other legal requirements relating to financialstatements.

- Disclosure of any related party transactions.

- Qualifications in the draft audit report.

(v) Reviewing, with the management, the quarterly financial statements beforesubmission to the Board for approval.

(vi) Reviewing, with the management, performance of statutory and internal auditors,adequacy of the internal control systems.

(vii) Reviewing the adequacy of internal audit function including the structure of theinternal audit department, staffing and seniority of the official heading the department,reporting structure, coverage and frequency of internal audit.

(viii) Discussion with internal auditors any significant findings and follow upthereon.

(ix) Reviewing the findings of any internal investigations by the internal auditorsinto matters where there is suspected fraud or irregularity or a failure of internalcontrol systems of a material nature and reporting the matter to the Board.

(x) To look into the reasons for substantial defaults in the payment to the depositors,shareholders (in case of non payment of declared dividends) and creditors.

(xi) Carrying out any other function as is mentioned in the terms of references of theAudit Committee.

Chairman of the preceding Audit Committee meeting was present in the last AnnualGeneral Meeting.

Audit Committee meetings and attendance

The Audit Committee met 6 times during the year.

Attendance

Shareholders' Grievance Committee

Audit Committee also looks after the redressal of complaints/grievances of theshareholders/investors and focuses on strengthening of investor relation. The terms ofreference of the Shareholders' Grievance Committee include redressal ofshareholders'/investors' complaints/grievances pertaining to sharetransfers/transmissions, non receipt of dividend/Annual Reports, issue of duplicatecertificates, rematerialization/dematerialization of shares, change in address, bankparticulars etc. Shri K. N. Ravindra, Company Secretary is the compliance officer.

The Company addresses all complaints/grievances of the shareholders/investors,debenture holders expeditiously and usually resolves in 2-3 days time except in case ofissue of duplicate warrants/DDs or cases which requires certain legal compliance. Detailsof complaints/grievances received and settled are published along with the quarterlyfinancial results of the Company.

During the year, the Company received and resolved 48 complaints / grievances from theshareholders/investors of the Company. Besides, various queries / correspondence fromshareholders/investors were promptly attended to. The status of thesecomplaints/grievances is as under:

3.2 HR Committee

Terms of reference of HR Committee include recommendation to the Board on framing ofrules and regulations and changes therein relating to recruitment, transfer, promotion,deputation and other conditions of service in respect of below Board level employees, wagestructure and scale of pay of the non-executives and any changes therein, organizationchart including manpower planning and any other references made by the Board from time totime.

The Committee is headed by an independent Director. The Committee met 7 times duringthe year.

Attendence

Remuneration Committee

NALCO being a Government Company, the appointment, terms and conditions of remunerationof the Whole time directors are decided by the President of India through administrativeministry.

(a) Whole time Directors

# Figures are based on revised scales.

* Other benefits include Medical facilities, Leave Travel Concession, ResidentialAccomodation, Electricity & water charges, Upkeep allowance, Entertainment allowance ,productivity and performance related incentives etc.

(b) Part-time Non-official (independent) directors

There are eight part time non-official (independent) Directors on the Board. Theindependent Directors are paid sitting fees of 710,000/-for attending each meeting ofBoard/ Committees thereof. Details of sitting fees paid to the independent Directors forthe year are given below:

(c) Part-time official directors

There were two part-time official directors on the Board of the Company as on31.03.2010. No remuneration was paid to the part-time official directors.

Service contracts, notice period, severance fee

The Chairman-cum-Managing Director and other whole time directors are appointed by thePresident of India for a period of five years from the date of taking over charge or tillthe date of superannuation (presently 60 years of age) or till further order from theGovernment of India, whichever event occurs first.

Government Nominee Directors who are appointed by the President of India are from theMinistry of Mines. They retire from the Board on ceasing to be officials of Ministry ofMines.

Independent Directors are appointed by the President of India for a period of threeyears usually. There is no provision for payment of severance fees.

3.3 Technology Committee

The terms of reference of Technology Committee include monitoring and paying specialattention to the assessment of the Company's technology status, acquiring and assimilatingtechnologies necessary to make it competitive and to its own R&D efforts formaintaining sustained strength in the technological field.

The Technology Committee consists of four independent directors and two whole timedirectors. Dr. A. Sahay, Independent Director is Chairman of the Committee. The committeemet 4 times during the year.

3.4 Share Transfer Committee

The Share Transfer Committee considers and approves issue of new share certificates incase of torn/mutilated/defaced/lost/rematerialisation, share transfer, transmission,transposition and other related activities in physical mode besides taking note ofbeneficial owners' position under demat mode. The Board has also authorized the CompanySecretary to approve requests for only transfer/transmission of shares.

30 meetings of Share transfer Committee/Share transfer approval took place during theyear ended 31st March, 2010.

3.5 Committee of Directors for Sales

The terms of reference of Committee of Directors for Sales includes decision on allshort term contracts of sale both for alumina and aluminium i.e. the contracts for aperiod of one year or less in the cases where the value exceeds the powers delegated toCMD.

Chairman-cum-Managing Director, all whole time directors and one co-opted officer(s) ofthe Marketing department are members of the Committee.

The committee met 9 times during the year.

3.6 Committee of Directors for Procurements

The terms of reference of the committee of Directors for procurement includes approvalof contracts/items/packages/tenders with financial limit upto Rs. 50 crore in each case,in respect of all capital expenditure which have been included in the capital budget, dulyapproved by the Board and for procurement of all raw materials which are beyond the powersdelegated to CMD.

Chairman-cum-Managing Director and all functional directors of the Company constitutethe Committee.

The committee met 11 times during the year.

3.7 Investment Committee

The terms of reference of Investment Committee include formulation of proceduralguidelines for investment of surplus funds subject to overall guidelines issued by theGovernment of India in this regard.

The Committee met once during the year.

3.8 Committee of Directors for consideration of unaudited financial results

The Committee of Directors for consideration of unaudited financial results wasconstituted in terms of Clause 41 (II) of the Listing Agreement, to consider and take onrecord, the quarterly financial results after the same are considered by the AuditCommittee. The quarterly financial results approved by the Committee are placed before theBoard in next Board meeting.

The Committee consists of 3 whole time Directors, 1 Part-time Official Director and 2Independent Directors. The quorum of the meeting is 2 Directors personally presentincluding 1 Independent Director. CMD is Chairman of the Committee.

The Committee met once during the year.

3.9 Committee of Directors to review court cases

A Committee of Directors was constituted during the year for examination and review ofvarious legal cases between the Company and the Government of Odisha.

The Committee consists of Director (Finance) and 3 Independent Directors. Shri S.B.Mishra, Independent Director is Chairman of the Committee.

The Committee met once to review the court cases.

3.10 Committee of Directors on Corporate Social Responsibility

The terms of reference of the Committee of Directors on Corporate Social Responsibilityincludes proper planning, execution and monitoring of the NALCO Foundation an independenttrust formed and registered for managing and overseeing the Corporate SocialResponsibility activities of the Company. The Committee consists of 3 whole timeDirectors, 1 Part time official Director and 1 Independent Director. CMD is Chairman ofthe Committee.

3.11 Committee of Directors for Indonesia Project

Committee of Directors on Indonesia projects was constituted during the year with 2whole time Directors including CMD, 1 Part time official Director and 1 IndependentDirector. The terms of reference of the Committee is to negotiate and recommend to Boardon the issues relating to Indonesia project.

The Committee has since been rechristened as 'Committee of Directors for Overseasventures' to study and recommend to the Board, all proposals for pursuing businessinterests abroad.

4.0 Statutory Auditors

Comptroller and Auditor General of India (C&AG) has appointed M/s. PA&Associates, Bhubaneswar and M/s. C.K. Prusty & Associates, Bhubaneswar as jointStatutory Auditors of the Company for the financial year 2009-10.

The fees paid/payable to the joint statutory auditors for the year was 7 11 lakhstowards statutory audit fees, 7 11 lakhs towards Limited Review Report for all fourquarters, 7 2.25 lakhs towards fee for Tax audit and 7 0.5 lakhs towards fee forcertification on Corporate Governance.

5.0 General Meetings of Shareholders

Particulars of the General Meetings of the shareholders held during last 3 years:

Annual General Meeting

No special resolution was passed either through postal ballot or at any of the GeneralMeetings of the members held during the year under report.

Material Contracts/Related Party Transactions

The Company has not entered into any material financial or commercial transactions withthe Directors or the Management or their relatives or the companies and firms, etc. inwhich they are either directly or through their relatives interested as Directors and/orPartners. The Company has obtained declarations from all concerned in this regard, whichwere noted by the Board.

Compliance

The Company has complied with all applicable rules and the requirement of regulatoryauthorities on capital market and no penalties or strictures were imposed on the Companyduring last three years except one adjudication notice issued by SEBI for non-complianceof Clause 49 of the listing agreement regarding composition of the Board. However, theadjudication proceeding was dropped by SEBI on suitable reply by the Company.

Code of Conduct for Directors and Senior Executives

The Company's Board of Directors and Management are committed for conducting businessin accordance with the highest standards of business ethics and complying with applicablelaws. A comprehensive code for whole time and Non-Executive Directors as well as for thesenior management of the Company has been evolved and adopted by the Board. All members ofthe Board and senior management affirm compliance with the Code of Conduct at thebeginning of the financial year. Copy of the code of conduct is also posted at Company'swebsite: www.nalcoindia.com.

A declaration to this effect signed by Chairman-cum-Managing Director is given below:

"I hereby confirm that the Company has obtained from the members of the Board andsenior management (Key Executives), affirmation that they have complied with the Code ofConduct for Directors and senior management in respect of the financial year2009-10."

(A K Srivastava)

Chairman-Cum-Managing Director

CEO/CFO certification

In terms of Clause 49 of the Listing Agrement, the certification by the CEO and the CFOon the financial statement of the Company and internal controls relating to financialreporting has been submitted to the Board.

Non-Mandatory Requirements

The Company has not adopted any non-mandatory provisions specified in Annexure ID ofClause 49 of the Listing Agreement.

Accounting Treatment

The financial statements are prepared under the historical cost convention and havebeen prepared in accordance with applicable mandatory Accounting Standards and relevantpresentational requirements of Institute of Chartered Accountants of India and provisionsof the Companies Act, 1956.

Risk Management

Risk assessment and mitigation reports are placed to the Audit Committee periodically.More details on the subject are given under "Management Discussion and AnalysisReport".

Whistle Blower Policy

The Company being a CPSE, the CVC guidelines are applicable which provide adequatesafeguards to the employees. No separate whistle blower mechanism has been formulated.

Code of Conduct for Prevention of Insider Trading

In accordance with the Securities and Exchange Board of India (Insider Trading)Regulations, 1992, the Board has approved a comprehensive 'Code of Conduct for Preventionof Insider Trading'. Under this code, Directors, Key Executives and designated employeesare prohibited to deal in shares of your company during the closure of trading window andother specified period. Permission of Compliance officer is required for dealing in sharesbeyond specified limit. All Directors, Key Executives and designated employees are alsorequired to disclose related information periodically as defined in the code. CompanySecretary is the Compliance officer under this code.

Quarterly/annual financial results

The Company regularly intimates un-audited as well as audited financial results toStock Exchanges soon after these are taken on record by the Board and publish them inleading English and vernacular newspapers in India. The results are also promptly uploadedin Corporate Filing & Dissemination System (CFDS) and displayed in Company's web site:www.nalcoindia.com.

News releases, presentations

Official news releases, presentations made to media and to Institutionalinvestors/analysts are displayed at Company's website: www.nalcoindia.com. Suchpresentations are also sent to the Stock Exchanges in which Company's shares are listed.

Website

The Company's website: www.nalcoindia.com contains separate dedicated section'Investors' page' wherein all shareholders/investors, debenture holders' information areavailable. Company's Annual Report, shareholding pattern, Quarterly financial results areavailable on the website in downloadable form.

Annual Report

Annual Report containing Directors' Report, Management Discussion and Analysis Report,Corporate Governance Report, Auditors' Report, Audited Accounts, Consolidated Financialstatements and other important shareholders information is circulated to the members andothers entitled thereto. It is also hosted in the Company's website.

9.0 Shareholders' information

Annual General Meeting

Date: 30th September, 2010

Time: 11.00 A.M.

Venue: NALCO Bhawan, P/1, Nayapalli, Bhubaneswar-751 061

Financial Calendar for 2010-11:

Book Closure Dates

Dividend payment

Dividend is paid within 30 days of declaration of dividend as per the provisions of theCompanies Act, 1956. The final dividend for 2009-10 shall be paid within 30 days from thedate of declaration i.e. before 29^th October, 2010.

Details of dividend paid during the last five years are as follows:

Transfer of unpaid/unclaimed interest/dividend to IEPF

During the year, an amount of Rs. 8,37,629/- pertaining to unpaid and unclaimeddividend for the financial year 2001-02 has been transferred to the Investor Education andProtection Fund (IEPF) in terms of Section 205A of the Companies Act, 1956 and theInvestor Education and Protection Fund (Awareness and Protection of Investors) Rules,2001.

Further, a total amount of Rs. 3,32,435/- pertaining to unpaid and unclaimed 6^th& 7^th half yearly interest on 14.5% NCDs was transferred to IEPF during theyear.

The proposed dates for transfer of other unpaid and unclaimed dividends and debentureinterest on expiry of 7 years is given in the Notice convening the Annual General Meeting.

Listing on Stock Exchanges

NALCO shares are presently listed in following Stock Exchanges:

Listing fees for the year 2010-11 has been paid to both the Stock Exchanges. Finalapproval for delisting of shares from The Calcutta Stock Exchange is still awaited.

Out of the total paid-up equity capital of 7 644.31 crores, the President of Indiaholds 56,14,99,635 equity shares of Rs. 10/- each fully paid up, in physical form. TheCompany has listed balance 8,28,09,993 shares of Rs. 10/- each fully paid-up, comprising12.85% of the total paid-up capital with the above Stock Exchanges. Of the listed shares,99.14% were held in demat mode as on 31.03.2010.

Market Price Data

(Amount in Rs.)

H = Highest, L=Lowest & V=Volume (No.) Source: Web-sites of BSE &NSE

Registrar and Transfer Agents

All kinds of investors' related services, both for physical as well as electronicsegments are provided from its in-house Share Registry at the following address.Complaints/Grievances are resolved within 2-3 days time on an average.

National Aluminium Company Ltd.

Share Registry

NALCO Bhawan, Plot No. P/1,Nayapalli,

Bhubaneswar-751 061(Odisha)

Tel : 0674-2303197

0674-2301988 to 2301999 (12 lines) (EPABX) - (Extn. 2585-87)

Fax: 0674-2300677

E-mail addresses: i) knravindra@nalcoindia.co.in

ii) dmrao@nalcoindia.co.in

iii) nkmohanty@nalcoindia.co.in

iv) bharatsahu@nalcoindia.co.in

Pursuant to Clause 47-C of the Listing Agreement, half-yearly certificate on complianceof share transfer formalities obtained from Practicing Company Secretary have beensubmitted to Stock Exchanges in time.

The total number of transfer deeds processed and shares transferred during the lastthree years are as under:

Shareholding pattern as on 31.03.2010

* President of India along with 6 nominees

Distribution schedule of shareholding

Dematerialisation/Rematerialisation of Listed Shares & Liquidity

NALCO shares are compulsorily traded in demat form in NSE and BSE. Demat requests areconfirmed to the respective Depositories (NSDL/CDSL) within 8-10 days of receipt of DematRequest Forms (DRFs) along with original share certificates from the DPs.

During the financial year, total no. of 21,799 shares has been demated under both theDepositories as detailed below:

NSDL:15,401 CDSL:6,398

99.14% of the Company's total listed share capital stands dematerialized as on 31^stMarch, 2010 as compared to 99.11 % as on 31st March, 2009.

During the year, the Company has confirmed 2 rematerialisation requests for 11 sharesand the physical share certificates were dispatched to the respective shareholders intime.

10.0 Outstanding GDRs/ADRs/Warrants or any Convertible Instruments, Conversion Date andlikely impact on equity

The Company has neither issued any GDR / ADR nor any convertible instrument outstandingas on date.

11.0 Plant locations of the Company

Mines & Refinery

Mines & Refinery Complex

Damanjodi - 763 008

Dist.-Koraput (Odisha)

Smelter Plant

Nalco Nagar

Angul - 759 145. (Odisha)

Captive Power Plant

Angul - 759 122. (Odisha)

Port Facilities

Opposite Ore Handling Complex

Port Area, Visakhapatnam - 530 035

(Andhra Pradesh)

Address for correspondence

Registered Office :

NALCO Bhawan

Plot No. P/1, Nayapalli,

Bhubaneswar-751 061 (Odisha)

AUDITORS' CERTIFICATE

To

The Members

National Aluminium Company Limited, Bhubaneswar

We have examined the compliance of conditions of Corporate Governance by NATIONALALUMINIUM COMPANY LIMITED, for the year ended on 31st March, 2010 as stipulated inClause 49 of the Listing Agreement of the said Company with Stock Exchanges.

The compliance of conditions of Corporate Governance is the responsibility of theManagement. Our examination was limited to procedures and implementation thereof, adoptedby the company for ensuring the compliance of the conditions of Corporate Governance. Itis neither an audit nor an expression of opinion on the financial statements of theCompany.

In our opinion and to the best of our information and according to the explanationsgiven to us, and the representations made by the Directors and the Management, we certifythat the Company has complied with the conditions of Corporate Governance as stipulated inthe above mentioned Listing Agreement.

We further state that such compliance is neither an assurance as to the futureviability of the company nor the efficiency or effectiveness with which the management hasconducted the affairs of the Company.

SECRETARIAL AUDIT REPORT

To

The Members

National Aluminum Company Limited Bhubaneswar

We have examined all secretarial records and the compliance of various provisions ofthe Companies Act, 1956 and the rules made under that Act, the regulations, guidelines andthe instructions prescribed under the Securities and Exchange Board of India (SEBI) Act,1992, relevant clauses of the Equity Listing Agreements with Bombay Stock Exchange Limitedand National Stock Exchange of India Limited, the Depositories Act, 1996 and theregulations and bye-laws framed under that Act, for the financial year ended 31^stMarch, 2010 and we report that :

1. Maintenance of Statutory Records

The Company has kept and maintained upto date statutory registers & records asrequired under various provisions of the Companies Act, 1956 and the rules made thereunder and has made the necessary entries therein.

2. Filing of Statutory Returns

The Company filed all statutory forms and returns timely with the Registrar ofCompanies and other Statutory Authorities and all documents/intimations under variousStatutes/Listing Agreement were regularly filed with the Stock Exchanges within the duedate.

3. Composition of the Board

Clause 49 of listing agreement requires that if the Chairman of the Company isexecutive Chairman then not less than half of the Board of Directors should comprise ofindependent directors. The Company had sixteen directors on its Board as on 31^stMarch 2010. In compliance of Clause 49 of the listing agreement, the Board comprised eightindependent directors.

4. Board Meetings

All the Board meetings of the Company were duly held during the year after givingproper notices and observing the presence of proper quorum. After completion of all thesemeetings, the proceedings including resolutions by circulation were properly recorded andsigned in the Minutes Book by the Chairman within due time.

5. In -House Share Registry

All share related activities both physical and electronic segments are handled at theIn -house Share Registry of the Company located at its Registered Office at NALCO Bhawan,P/1, Nayapalli, Bhubaneswar-751061 and the same is in compliance with the SEBI CircularNo. D&CC/FITTC/CIR-15/2002 dt.27.12.2002.

6. Share Transfer Committee

The Share Transfer Committee, formed under Clause VI C of Clause 49 of listingagreement considers and approves issue of new share certificates in case oftorn/mutilated/defaced/lost/rematerialisation of shares in addition totransfer/transmission of shares. For quick disposal of requests, Company Secretary hasbeen authorized by the Board to consider the transfer/transmission of shares. During theyear ended 31^st March, 2010 share transfer/transmission including issue of newshare certificates arising out of torn/mutilated/defaced/lost/rematerialisation wereapproved 3 times through Share Transfer Committee and Company Secretary approved onlytransfer/transmission of shares 27 times.

7. Redressal of Investor Grievances

All complaints/grievances relating to share transfers, transmissions, demat/ remat ofshares, issue of duplicate share certificates, payment of dividend etc. were not onlyattended but also resolved within 2-3 days time of their receipt. Details of thesecomplaints/ grievances, share transfers, electronic holding of shares (both NSDL and CDSL)were put up in every Audit Committee Meeting (Audit Committee is also entrusted with thejob of looking into redressal of investor grievances).

8. Daily Reconciliation of Listed and Paid-up Capital

The Company has complied with the provisions of Depositories Act, 1996 and the bye-lawsframed thereunder by the Depositories with regard to reconciliation of records ofdematerialised securities with all securities issued by the Company. The reconciliation ofphysical and dematerialised shares with the total shares issued by the Company is carriedout on daily basis. The Company has adequate transparent systems and procedures to carryout the above reconciliation.

9. Dematerialisation /Rematerialisation

The Company has complied with the provisions of Depositories Act, 1996 and the bye-lawsframed thereunder by the Depositories with regard to dematerialsiation/rematerialisationof securities. The requests for dematerilisation/ rematerilisation were confirmed to therespective Depositories (NSDL/CDSL) within a week's time of receiving the physicaldocuments from the DPs as against 15 days from the date of receipt stipulated by theDepositories and 21 days from the date of uploading the individual requests stipulated bySEBI.

10. Payment of Corporate Cash Benefits to the Shareholders

The Company paid dividends on time to its shareholders after their declaration andwherever necessary rights to dividends were kept in abeyance, pending registration oftransfer of shares/ pending final settlement of suits in compliance with the provisions ofthe Companies Act, 1956.

11. Transfer to Investor Education and Protection Fund

On expiry of 7 years period from the date of declaration/payment, the Companytransferred the following unpaid/unclaimed interest and dividend to the Investor Educationand Protection Fund in terms of Section 205A of the Companies Act, 1956 and the InvestorEducation and Protection Fund (Awareness and Protection of Investors) Rules, 2001 :

A. Transfer of unpaid/unclaimed Interest on 14.5% NCDs

B. Transfer of unpaid/unclaimed Dividend

12. Insider Trading Regulations

The Company has complied with the provisions of the Securities and Exchange Board ofIndia (Prohibition of Insider Trading) Regulations, 1992 with regard to disclosures by thedirectors, officers and designated employees and has maintained proper records requiredunder these regulations. The Company has also framed code of internal procedures andconduct as per the regulations.

13. Legal Notice

During the year under review, the Company has not received any legal notice from anyStatutory Authorities like SEBI, Stock Exchanges and Registrar of Companies.

14. Public Deposits

The Company has not accepted any Public Deposits under Companies (Acceptance ofDeposits) Rules, 1975 during the year under review. The Company has neither issued anyGDR/ADR nor any convertible instrument during the year under review.

1. INDUSTRY STRUCTURE AND DEVELOPMENTS

Economies of different countries started recovering after unprecedented sharp fall inFY'09. The recovery has been impressive but burdened with some element of uncertainty. Asa result of FY'09 meltdown most of the producers in Aluminium Industry resorted tostrategies in response to the situation faced such as curtailing production, closures,etc. However, some of these producers considering the improved situation have subsequentlyre-started these facilities.

Alumina & Chemicals

During the year 2009, the world consumption of Alumina was 73.859 million MT againstthe world production of 74.309 million MT thus showing a surplus of 0.45 million MT. Theworld Alumina production and consumption declined by approx. 5.9 % and 5.8% respectivelyduring 2009 as compared to 2008.

In 2009, the spot price of alumina averaged around $249 a tonne. Prices showed signs ofrecovery in Q1, 2010 to an average of $340 a tonne, which reflected the improved outlookfor aluminium. The refinery curtailments during the first half of the year 2009 reducedavailability thereby providing necessary impetus for alumina prices to rise from rockbottom level of $180/tonne. The recovery in aluminium prices triggering smelter restartssaw alumina prices recover to above $300/tonne level. Stronger demand mainly from smelterrestarts and an unprecedented level of curtailments in refining capacity helped the marketto return to balance during the course of the year. Delayed restarts and freshcommissioning of refineries helped in the balancing act of fundamentals.

Alumina demand and supply are expected to be balanced in medium term. Increase inbauxite and freight costs, as well as energy cost is likely to support the alumina pricein medium-term.

Aluminium

During the year 2009, the world consumption of primary Aluminium was 34.341 million MTagainst world supply of 37.781 million MT, showing a surplus of 3.440 million MT. Theworld consumption declined drastically by approximately 8.2% while the supply declined by5.9% respectively during 2009 as compared to 2008.

Aluminium price averaged at $ 1664.8/T in 2009 which is 34% lower than the averageprice in 2008, primarily because of weaker demand for aluminium in major consumingcountries. Lower consumption and a relatively weaker response from global aluminiumproduction resulted in stocks build-up which stood at historical highs of 4.63 milliontonnes at LME by the end of 2009. Analysts expect production to remain around currentlevels for most of 2010.

Strength

Your Company's strength lies in its skilled and committed manpower, good qualitybauxite reserves, efficient technology, various well planned and ideally locatedinfrastructure facilities, efficient operations, production of good quality products atcompetitive cost, excellent customer service and commitment to good Corporate Governancepractices in all facets of its operations.

Weakness

Your Company is affected by the wide fluctuations in the LME prices, exchange ratefluctuation, shortage of coal and limited product range.

Opportunities

Revival of world economy has opened many opportunities for your Company to grow. Grantof Mining Leases over Gudem and KR Konda bauxite blocks in Andhra Pradesh and proposedestablishment of Alumina Refineries in Andhra Pradesh and Odisha will ensure yourCompany's leadership position as one of the leading manufacturer of alumina in the world.

Your Company will have over a million MT of surplus alumina on completion of 2nd PhaseExpansion. Your Company can set up Aluminium Smelter Plants in India and abroad whereenergy costs are cheaper.

Having good experience in operation of power plants will stand in good stead to enterinto the business of Independent Power Producer. Your Company is exploring various optionsincluding Nuclear Power option in this direction.

Nuclear Power is termed as the energy source of the future. Your Company's foray intonuclear power generation will be a significant step in realizing the goal of becoming anIndependent Power Producer.

Threats

Being nearer to the Naxal infested areas could be a threat to your Company's operationsat Mines & Refinery. However, your Company has taken adequate security measures incoordination with the State and Central Governments to address the naxal threat.

Although the State Government is very much supportive for the proposed Bauxite Minesand Alumina Refinery project in Andhra Pradesh, security concerns in view of the threatperception from Naxals may be a major impediment in achieving the target as per schedule.

4. SEGMENT-WISE PERFORMANCE

For the year under review, your Company achieved net profit of 7 814 crore on a totalincome of 7 5,548 crore. The detailed segment wise information is furnished below:

*Internal transfers have been eliminated.

# includes cash balance and capital works in progress.

Domestic Market Outlook

The Indian economy showed strong resilience in FY'09 in withstanding the economiccrisis and staged recovery largely on the back of stimulus packages by the Government.India witnessed a recovery as the GDP grew by approx. 7.4% in FY'10 from about 6.7% inFY'09. A sharp turnaround in the end-user segments of aluminium industry such asautomobiles, industrial & infrastructure and thrust on power sector growth propelledthe industry growth.

The current demand-supply situation for aluminium is largely balanced with consumptionin line with existing production plus imports and a relatively small volume of exports.However, the aluminium sector faces a significant concern of medium-term over-capacity dueto projects pursued by the three major players in the country. Capacity expansion throughplanned projects would almost treble production to 4.4 million tonnes by 2013. Consideringthat all aluminium projects would begin commercial production with expanded capacity asenvisaged, there could be at least two million tonnes of additional capacity for exportsby 2013. India's per capita consumption of aluminium is about 1.3 kg as against about 30kg in the developed world for which the industry need to explore new application areas anduntapped demand potential thereby setting up preference for aluminium in the future.

International Outlook Aluminium

Global aluminium consumption is expected to grow annually around 5% during the nextdecade, supported by continued urbanisation, industrialisation and economic developmentparticularly in developing economies.

Industry experts forecast that 2010 would witness considerable growth of the aluminiummarket generated by rising demand from the automotive and packaging sectors. Aluminiumconsumption is likely to grow by 12% in 2010 over 2009 because of such growth and of lowbase effect.

Alumina

For 2010 as a whole, alumina prices are forecast to average $325 a tonne, which isaround 30 per cent higher than the average for 2009. In the short term, prices areexpected to be supported by higher assumed world economic activity and thus, increaseddemand for aluminium.

Over the medium term, spot alumina prices are projected to ease, as productionincreases following the commissioning of new refining capacity.

6. RISKS & CONCERNS

An important factor to keep in mind over the coming quarters would be the potentialunwinding of some of the stock financing deals in LME. Because of these deals thealuminium market could be more sensitive than other commodities and base metals. Thismight be more of a point to watch for in late 2010or even 2011. Evolving views on thetiming of monetary policy changes, central banks' exit strategies and the associatedtightening of interest rates could impel speculative activity and give direction toAluminium prices.

Risk Management

Your Company continues to believe that managing risk is critical for its growth andsustenance. As such, your Company is constantly monitoring and assessing the internal aswell as external risk factors associated with its day to day business operations andfinancial management and thereby effectively mitigating possible risks associatedtherewith .

Your Company's approved Integrated Approach for Enterprise Risk Management is underimplementation in all process units as well as in operational areas.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has well established internal control systems commensurate with the natureand size of its operations. Internal audit function of your Company has been entrusted tothree reputed and well experienced external Chartered Accountants' firms .The internalaudit reports submitted by the auditors are discussed at functional directors level in thefirst instance and then submitted to the Audit Committee for its review , analysis andadvice to further strengthen the internal control systems covering all material controls,financial controls, compliance controls and risk management systems . Action taken reportson the observations of Audit Committee on internal audit reports are regularly submittedto the Audit Committee.

8. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Details on financial performance with respect to operational performance are given inthe Directors' Report.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT INCLUDING NUMBEROF PEOPLE EMPLOYED.

Human Resources

Manpower strength of your Company as on 31.03.2010 was 7,467 as against 7,461 at thelast day of the previous year. The detailed break up is given below:

* Including GETs/MTs/SOTs/JOTs Training & Development

Your Company believes that success of any organization is dependant on its experienced,trained and dedicated employees. To keep the employees abreast of the latest developments,constant efforts are made by your Company for functional and developmental training basedon the needs identified for the individual as well as for the organisation. Emphasis isplaced on specific position related training needs. Training effectiveness evaluation isalso carried out to measure the benefits derived from the training imparted. The trainingstatistics for the year 2009-10 is given below:

10. CORPORATE PLAN AND BUSINESS DEVELOPMENT

The new Corporate Plan and Vision 2020 were adopted by the Company in 2009-10. The newVision Statement of the Company is: 'To be a Reputed Global Company in the Metals andEnergy Sectors' New Mission statement adopted by the Company is:

- to achieve sustainable growth in business through diversification, innovation andglobal competitive edge.

- to continuously develop human resources, create safe working conditions, improveproductivity and quality, and reduce cost and waste.

- to satisfy the customers and shareholders, employees, and all other stakeholders.

- to be a good corporate citizen, protecting and enhancing the environment as well asdischarging social responsibility in order to ensure sustainable growth.

- to intensify R&D for Technology development.

The major thrust will be diversification and capacity addition. The major goalsidentified by your Company are:

- to achieve annual turnover of over Rs. 25,000 crore by 2020.

- to achieve annual production of 1.7 million ton Aluminum and 4 million ton Alumina by2020.

- to transform from being only an "aluminum producer" to become a metalproducer and energy provider.

- to venture into new fields of activity beyond Aluminum by setting up at least twodiversified projects by 2016.

- to target at least one 1000 MW IPP by 2016.

- to maximize value and long term return to share holders through a strategy of newinvestments, cost competitive mines and business driven by the quality of products andservices.

- to develop long-term relations with domestic and foreign clients and Joint Venturepartners.

- to develop a powerful scientific and technical base. Apart from investments in volumegrowth, the Company shall substantially finance R&D and modernization of facilities,laboratories, achieving improvements in the quality of products and satisfying customerdemands.

- to adopt main strategic priorities aimed at end user orientation.

In line with its Corporate Plan and Vision 2020, your Company is actively consideringthe possibilities of setting up of Aluminium Smelter Plants in other countries, wherepower is cheaply available. Your Company has opened a project office in Jakarta toexpedite pre-project activities in Indonesia. Your Company is also planning to set up asecond aluminium smelter plant in India and preparing mining plan for grant of MiningLease over Gudem and KR Konda blocks in Andhra Pradesh for which the Govt. of India hasaccorded consent for grant of Mining Lease.

Your Company has signed MoU with Nuclear Power Corporation of India Ltd. (NPCIL) forestablishment of a nuclear power plant in Joint Venture (JV). Project identification is inhand. Your Company has signed an MoU with Orissa Industrial Infrastructure DevelopmentCorporation (IDCO) to set up an Aluminium Park at Angul in joint venture. The JV Companynamed Angul Aluminium Park Private Limited' has been incorporated.

Your Company is also exploring various opportunities for securing mineral assetsabroad. In this connection, your Company is in discussion with various firms overseas.

11. COMPUTERIZATION ACTIVITIES INCLUDING ENTERPRISE RESOURCE PLANNING (ERP)

Your Company went live on Enterprise Resource Planning (ERP) with SAP R/3 in stagedmanner since February, 2010 and has covered Materials Management with SupplierRelationship Management (SRM), Finance and HR under the program in staged manner. Othermodules shall follow.

Your Company has strengthened its data pipelines both to the Internet and to the WorksLocations with fault tolerant high bandwidth links, to ensure un-interrupted dataconnectivity. This has also enabled tele-presence activities between Corporate Office andWorks locations. Multi Protocol Label Switching (MPLS) Virtual Private Network (VPN) hasbeen set-up with all Marketing Offices to provide secure and adequate bandwidth for allapplications.

E-governance in your Company is now broadened with the SRM module of ERP. Theapplications implemented earlier like e-tendering, on-line Vigilance complaints, on-lineproperty returns and e-helpline continue to be supported.

12. TOTAL QUALITY MANAGEMENT

All the manufacturing units of your Company have upgraded their Quality ManagementSystem to the latest standard i.e. ISO 9001 : 2008. Recertification audits of AluminaRefinery, Port Facilities and Smelter Plant were successfully completed during thefinancial year while other units successfully underwent Surveillance Audits.

Management continued its thrust on encouraging Quality Circles in the organisation.Thirteen Quality Circles from different units of your Company were selected throughChapter level competitions of QCFI for participating in the National Convention of QualityCircles held at Bangalore in December, 2009. Out of these, four Quality Circles qualifiedfor the highest level of award at the National Convention.

For the 14th year in succession your Company organised the All-Orissa Quality CircleConvention in April, 2009. This Convention is a flagship event in the quality movement inthe State.

13. SAFETY & HEALTH

Your Company has always laid due importance on development on the safety and health ofits employees and peripheral communities for their sustained well being. Proactiveengagement with the interested parties and focus on exceeding in performance beyondstatutory requirements has been the hallmark of your Company's intent towards Safety andHealth. In order to systematically manage the Occupational Health and Safety ManagementSystem, your Company has not only successfully retained the ISO 14001:2004 and OSHAS18001:2007 certification but has been continuously improving upon them.

14. ENVIRONMENTAL PROTECTION AND CONSERVATION, TECHNOLOGICAL CONSERVATION, RENEWABLEENERGY DEVELOPMENT, FOREIGN EXCHANGE CONSERVATION

Environmental Protection & Conservation

Environment Management plays a very important role in any organization for smoothrunning, growing and expanding its business from its existing boundaries to globalboundaries and the same is given utmost importance by your organization to all thesefactors to meet the statutory requirements and improve beyond it.

The main highlights in that direction are detailed below:

- All the Units of your Company are operating with valid 'Consent to Operate' under theAir and Water Acts for the existing capacities.

- All the five major Production Units have valid authorization to handle hazardouswastes.

- Hospitals at Damanjodi and Angul have valid authorization for scientificallyprocessing biomedical wastes.

- In line with its objective of ensuring greater transparency in the Unit's operations,the critical environmental parameters are now being displayed prominently outside theplant gate, as well as uploaded on the Company's website, for information of allinterested parties.

- The Environment Management System of all five operating units is certified as per ISO14001:2004 version. Recertification/Surveillance Audit for all units have been completedand recommended for continuation of certificate.

- For control of emission of suspended particulate matter (SPM), CPP unit has obtainedthe permission for use of Ammonia Flue Gas Conditioning system. The system has beendesigned indigenously & installed in unit I, III, IV & VI. The system issuccessfully working on continuous basis.

- New Sewage Treatment Plant at CISF Colony, Angul has been commissioned & isoperating under trial run. Technological Conservation

Your Company adopted the then latest technology AP-18 of Aluminium Pechiney, France,following technical collaboration with the global leader in Aluminium Refining andSmelting. The Technical Collaboration Agreement was signed with Aluminium Pechiney (AP) in1 981 and was subsequently extended from time to time to avail the Continued TechnicalAssistance (CTA) of AP and implementation of Phase-I and Phase-II expansion projects ofyour Company.

Renewable Energy Development

With steady economic growth, the demand for electric power in the country is alsoincreasing manifold. To power this growth, the use of conventional fossil fuels in boilersis posing high degree of environmental problems apart from the growing concern on the fastdepletion of these non renewable resources. NALCO which operates 10X120 MW coal firedunits also shares this concern as a responsible corporate citizen and is making efforts totap the renewable sources of energy for its own and for commercial sale. In this endeavor,your Company has plans to set up a 50MW Wind Power Plant in any of the wind bearinglocations in India. Global tenders for the same have been invited and the order for theproject is likely to be finalized soon.

Foreign Exchange Conservation

The foreign exchange earnings and foreign exchange outgo of your Company for the yearunder report are Rs. 2,075.04 crore and Rs. 443.23 crore respectively.

15. ANCILLARY DEVELOPMENT

In the direction of development and promotion of ancillary industries, your Company hasawarded Ancillary status to 50 Small Scale Industry (SSI) units till date. Your Companycontinued its efforts to encourage SSI units by placing orders on them for various itemslike liquid Coal Tar Pitch, CP Coke etc. During the year 2009-10 the value of ordersplaced on SSI units was to the tune of 7 50.57 crore.

Your Company also participated in the National Vendor Development Programme(Buyer-Sellers Meet) and Seminar-cum-Exhibition held on 22nd & 23rd of Dec,2009 atExhibition Ground, Bhubaneswar organized by Micro Small & Medium EnterprisesDevelopment Institute(MSME) & Director of Industries, Govt. of Odisha.

16. CORPORATE SOCIAL RESPONSIBILITY

You will be pleased to know that your Board has taken a decision to set up a 'NALCOFoundation' with a vision 'To be an Agent to Engineer Holistic Development' to augment theexisting periphery development activities being undertaken through Rehabilitation &Periphery Development Advisory Committees (RPDACs) as a part of discharging its CorporateSocial Responsibility (CSR).

The Foundation has been registered under the Indian Trusts Act and your Board has takena decision to contribute 1% of Net Profit of your Company every year, in addition to 1% ofnet profit being spent through RPDACs. The Foundation will discharge its responsibilitieswithin the guidelines issued by the Government of India from time to time.

With the setting up a Foundation, your Board is confident that there will be specialattention on CSR activities of your Company, which will generate enough goodwill for theCompany.

The peripheral development activities undertaken during the year under report are:

Mines and Refinery Complex, Damanjodi

• Release of Rs. 11.28 crore, being the balance amount under Periphery DevelopmentProgramme of previous years and 7 3.05 crore towards mobilization advance against the newprojects for the year 2009-10.

• Operation of a mobile health care unit since June, 2009 to reach out to theneedy people living in the nearby villages with medicines. During the year, 297 camps wereorganized in which 23,166 patients were treated.

• Contribution of 7 20 lakhs, double the amount of previous years, to organize'PARAB', a 3-day Tribal Festival of Koraput district by the District Administration.

• Continuation of operation of a Grievance Cell for the land losers and people ofperiphery villages.

Smelter and Power Complex, Angul

• Two Mobile health care services started in November, 2006 continued to beprovided at 38 identified venues in 27 peripheral villages. The teams of doctors,pharmacists and attendants provide medical services and distribute medicines to thepatients. During the year, 809 such camps were organized in which 33,501 patients weretreated.

• A third mobile health care unit has started catering to the needs of villagersin the vicinity of Utkal-E Coal Block Project of your Company.

• Organised 16 animal health camps in the four identified villages in which 3,987animals were treated.

• Organised science exhibition, literary competitions and rural sports among thestudents of 20 Peripheral High Schools.

• Provided financial assistances to different peripheral schools to purchaseeducational kits, furniture and books, as also for organizing cultural functions.

• Provision of drinking water tankers to 23 affected villages.

• Organised Special Camps for physically challanged.

Corporate Office, Bhubaneswar

• Providing 15 PCR vans to Commissionerate of Police, Bhubaneswar to help peoplein need and maintain law and order in the city.

• Contribution to Corpus Fund of National Foundation for Communal Harmony, Govt.of India.

• Contribution to Centurion School of Rural Enterprise Management for purchasingequipment for imparting training to tribal youth.

• Contribution to Directorate of Sports & Youth Services, Govt. of Odisha forNational Youth Festival - 2010.

SPORTS

Your Company continued to play an active role in promotion of sports. In thatdirection, your Company sponsored 'Nalco Cup' Tennis Tournament, Basketball Tournament,Hockey Championship and other games during the year under report. Inter Unit Volleyball,Badminton, Cricket tournaments were also organized at Corporate Office, Angul andDamanjodi Sectors. Your Company also sponsored some rural games organised at differentparts in Odisha.

Your Company's teams participated in All India Public Sector Volleyball Tournament heldat Dehradun and All India Public Sector Football Tournament held at Salt Lake, Kolkata.

You will be pleased to know that Debasis Mohanty of your Company captained All IndiaPublic Sector Cricket Team for Corporate Cup 2009, footballer Sradhanjali Samantaray ofyour Company captained Orissa Women football Team, which participated in NationalChampionship held at Chennai during the year.

Athlet Anuradha Biswal of your Company won silver medals in National AthleticChampionships held at Bhopal and Chennai.

IMPLEMENTATION OF SOCIAL ACCOUNTABILITY STANDARD

Your Company believes and practices transparency and accountability in businesspractices and supply chain to ensure basic human rights in work place.

Keeping the above in mind, your Company has implemented the requirements of SA 8000Standard in all its units. SA 8000 standard (Social Accountability Management System)measures the performance of an organization in eight key areas viz. Child Labour, Forced& Compulsory labour, Health & Safety, Freedom of Association & CollectiveBargaining, Discrimination, Disciplinary Practices, Working Hours and Remuneration.

Implementation of SA 8000 Standard will go a long way in building the brand image ofyour Company and also serves as a measure of implementation of CSR.

IMPLEMENTATION OF THE RTI ACT, 2005

The Company has been complying with the requirements under the Act and providingrequired information to the information seekers that is permissible to be provided underthe Act.

During the year 2009-10, your Company regularly reviewed and updated the pro-activedisclosures published under 17 different templates in the Right to Information segment ofthe Company's website www.nalcoindia.com as required to be published under the Act.

The status of information requests received by the Company at various stages during theyear 2009-10 is given below:

*All the cases pending as on 31.03.2010 have been subsequently disposed off.