With focus on downstream products, Hindalco wants to build a Novelis in India: Pai

Suresh P. Iyengar | | Updated on: May 26, 2022
Satish Pai, Managing Director, Hindalco Industries

Satish Pai, Managing Director, Hindalco Industries

After a historic ₹13,370-cr profit, company has earmarked capex of ₹3,000 crore for FY23

After a historic profit of ₹13,370 crore, Hindalco Industries is out to build a Novelis in India by ploughing back its profit in value added downstream projects.

Satish Pai, Managing Director, Hindalco Industries, said that in next five year, the company expects its downstream capacity to go up from 4,00,000 tonnes to 7,00,000 tonnes while the upstream capacity may remain static at 1.3 million tonne.

Given the kind of downstream expansion, Hindalco wants to build a Novelis (the world’s largest aluminium company) in India supplying all high-end value added products across the globe. Incidentally, Novelis, the subsidiary of Hindalco, had announced a capex of $3 billion in different countries where it operates.

Thinking green

Hindalco has decided not to expand upstream capacity as it wants to be known as a green company and the focus now would be on reducing carbon emission rather than adding to it. If Hindalco manages to get another bauxite mine, alumina capacity will also be ramped up, said Pai.

The company has earmarked a capex of ₹3,000 crore for this fiscal to be spent largely on the ongoing down stream expansion.

The demand for both aluminium and copper still remain strong amid tight supply situation. Though the LME prices have come down due to economic slowdown in China on revival of Covid, it will bounce back when the global economy showing signs of revival, he added.

Coal shortage major concern

On the cost front, Pai said the short supply of coal remains a major concern and the inventory levels have halved to 10 days. With the monsoon season fast approaching, he expects the consumer power demand to come down leading to better coal supply for industrial use.

The company’s Ebitda margins are at the very comfortable level to overcome any cost increase.

The operational cost in Q4 has gone up by 9.5 per cent as compared with Q3, but it is very difficult to predict cost increase in Q1 and Q2 of this fiscal due to coal availability concern and volatile prices, he said. The company cannot substitute domestic coal supply with imports as the international prices are very high, he added.

Asked whether the company expects an export duty on aluminium like the one imposed on steel, he said the company has been forced to export aluminium as 40 per cent of the domestic demand is met by products made of imported recycled scrap. If at all, the government should levy import duty on scrap rather than on metal export, he said.

Published on May 26, 2022
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