The Hindu Business Line : Indal gets nod for Rs 2,000-cr phase-II expansion plan

INDIAN Aluminium Company Ltd's (Indal) second phase expansion programme, entailing an investment of about Rs 2,000 crore, has been approved by the company's board. The proposed expansion programme is to be completed by 2007.

Under the expansion scheme, this wholly-owned Aditya Birla group subsidiary will primarily increase its virgin metal production capacity along with matching expansion of its alumina refineries and captive power generation. The objective of the programme is to make it a metal surplus company even after satisfying its own metal requirement for manufacturing various fabricated products.

While confirming the development, an Indal source said that a total of about Rs 1,400 crore would be invested to expand its alumina refinery capacities at Muri in Bihar from 1,10,000 tonnes to 5,00,000 tonnes and at Belgaum in Karnataka from 3,40,000 tonnes to 5,50,000 tonnes per annum. Whereas, an investment of about Rs.600 crore would be made towards expansion of its smelter capacity at Hirakud in Orissa from 65,000 tonnes to 1,00,000 tonnes per annum and also to increase generation capacity from its captive power plant from 167.5 MW to 267.5 MW.

As has been planned, the smelter's capacity will be increased by shifting " idle pots" from the company's closed smelting operations at Belgaum and Alupuram in Kerala. If things go smoothly, the company may augment smelting capacity even to the level of 1,40,000 tonnes, thereby making it a metal surplus company to the extent of 40,000 per annum. It may noted that the company's own metal requirement is about 1,00,000 tonnes, which, at present is being met partly by converting its alumina into metal from Hindalco Industries' smelter at Renukoot in Uttar Pradesh.

The Indal source said that the company had no plans to expand production capacity of its fabricated products because the capacity already created appeared to be in excess of the requirements of the domestic market due to lack of buyer support for value added quality products. In fact, the same fabricated items produced by small and medium scale units utilising recycled metal were available at reduced rates because there was no compulsion to maintain quality.

The investment earmarked for the second phase would be met partly from internal sources and partly from loans on the basis of 40:60 debt equity ratio.

Incidentally, the first phase of the expansion programme has been completed since Indal became a part of the Aditya Birla group. As a result, on the back of a record output from the expanded Hirakud smelter, the company's virgin metal production went up by 28 per cent to 65,000 tonnes in the 2003-04 fiscal from 51,233 tonnes in 2002-03.