Aluminium prices have increased globally due to improved demand environment coupled with reduction in oversupply. (Representational Image)

Public sector aluminium firm National Aluminium Company Ltd (Nalco) plans to utilise the internal cash reserve of around Rs 3,500 crore in its ambitious domestic expansion plan and also expects to register a higher business growth in the second half of this financial year with improved demand environment.

Higher pricing of the metal would soon reflect in company's balance sheet, the chairman and managing director, TK Chand, told CNBC TV18 in an interview.

Nalco had earlier drawn up an ambitious expansion plan at an investment Rs 37,000 crore for next 5-7 years, which included establishment of greenfield units abroad.

As part of the company's domestic expansion plan, the company is exploring opportunities for setting up a new unit at Angul in Odisha at an investment of Rs 12,000 crore.

Its plans also include setting up of a 1 million tonne per annum alumina refinery at Damanjodi in Odisha at an estimated cost of Rs 6,000 crore. Alumina is an intermediary product in aluminium production.

To secure raw material supply, especially coal, the aluminium firm will develop Utkal D and E coal blocks along with Pottangi coal mines at an investment of around Rs 300 crore. Nalco will also set up a caustic soda unit in Gujarat and invest Rs 500 crore in wind energy segment.

Talking on business environment, Chand said, "Business is expected to improve in the second half of current fiscal in comparison to the first half." The company's capacity utilisation remained at optimum levels, the report quoted Chand as saying.

With improved pricing of aluminium, the company also sees higher profitability in the third quarter ending December. Global price of aluminium at London Metal Exchange (LME) is currently hovering around $1,725 per tonne. "Aluminium prices have seen 5 percent improvement in October-November, benefits of which will come in the current quarter," the report said.

Referring to coal production from its captive blocks, the chairman said the company hasn't started producing coal from these blocks and is procuring coal through a linkage from Coal India.

Shares of Nalco, which closed 3.68 percent lower at Rs 66.70 on Thursday, saw around 30 percent jump this week.