Blessed with a rich bauxite mine, low production costs and high global metal prices, the National Aluminium Company Ltd (Nalco), perched in the mineral-rich eastern state of Orissa, has seen no losses since its inception.But analysts said much of the company's boom is due to high world prices, which have dived in the last six months.

The company last year cleared all its debts and became a zero-debt company on September 30, repaying 20 billion yen ($178.41 million), and is one of the few firms which has won government approval for a capital restructuring.Nalco's aluminium output in 1997/98 (April-March) zoomed to 55,475 tonnes from 14,875 tonnes the previous year, but output in the current year will be much lower because of the failure of some of the pots in its aluminiumsmelter.

Nevertheless, officials say the profit curve will continue, though the margins will be hit by low global aluminium prices.

India's domestic aluminium prices are linked to prices prevailing at the London Metal Exchange.

"The most important secret is to keep your manpower thin. Most public sector enterprises suffer because of overstaffing," Nalco chairman SN Johri told Reuters.

He said the company has been able to run its operations--smelting, refining, power plant and port facilities -- with around 6,000 employees, without adding much fat since it started commercial production in 1988.

Officials say Nalco's focus in the next five years would be to implement its strategy for expansion.

It plans to double the annual capacity of its bauxite mines at Panchpatmalli to 4.8 million tonnes from the current 2.4 million and its alumina refinery capacity at Damanjodi to 1.58 million tonnes from the existing 800,000 tonnes.

The company also has plans to increase its smelter plant at Angul to 345,000tonnes from 230,000 tonnes and step up capacity of its captive power plant at the smelter.

Officials said it had decided to continue to use the updated technology of France's Aluminium Pechiney to expand its smelter and alumina plant and fund the expansion internally.

Johri said Nalco took a calculated risk by adopting technology proven only in the laboratory, and not tried by the industry. As a result, when the company started operations, it had the latest technology, and updating it was easy.

"The only concern for the company now is the internationally low prices of aluminium. The prices should recover soon, they cannot fall much below this level," said an analyst with the Credit Rating and Information Services of India Ltd (Crisil). Another Mumbai-based analyst said metal prices should go up in the next 18 months.

"The company is sitting on a pithead of bauxite and coal, its power consumption is low and has its own jetty and locomotive...it is insulated from infrastructure bottlenecks," he said.Nalco last week said net profit in the nine months ending December 31 had dipped to Rs 1.62 billion ($38.12 million) from Rs 3.66 billion in the same period of the previous year.Johri said Nalco's metal output in 1998/99 was expected to drop to 150,000 tonnes from 200,162 in 1997/98, but a dip in metal exports would be made up with increased alumina exports. He said output next year should be around 218,000 tonnes.

Currently, the government holds 87.15 per cent of Nalco's equity. The rest is with employees and financial institutions. India's divestment commission has recommended that the government sell a 30 per cent stake from its holdings.

Johri said aluminium demand was growing and prices were cyclical. "Five years hence, I am looking at a turnover of say close to Rs 40 billion and a profit of Rs 10 billion," Johri said.