“Infrastructure, Electrification and Downstream Applications to Boost the Aluminium Market in India”

“On a longer term, I’m still very bullish about the Indian market... There are two things that will boost the aluminium market: one is India’s focus on electrification and infrastructure and second is when companies like Hindalco will develop the downstream capacities and capabilities, that will improve the product supply…and hence, the market”

Mr. Sachin Satpute,
Chief Marketing Officer, Hindalco Industries Ltd.

AlCircle team had an opportunity to interact with Mr. Sachin Satpute, the Chief Marketing Officer of Aluminium Business at Hindalco Industries Ltd. during Aluminium India 2013. Mr. Satpute has also served as Vice President of Sales and Marketing at Novelis Korea Limited and the Managing Director of Aluminium Company of Malaysia Berhad (ALCOM). With his vast experience in the primary and downstream aluminium sector, he shared with AlCircle his outlook for aluminium market in India with special reference to Hindalco Industries. He also gave his view on the digital marketing and e-commerce strategies for the aluminium industry.

An industry leader in aluminium and copper, Hindalco Industries Limited, the flagship company of Aditya Birla Group has come a long way since its launch in 1958 to become a name to reckon with in value-added alumina, aluminium and copper products. In 2007, with the landmark acquisition of Novelis Inc., the world leader in aluminium rolling and can stock business, Hindalco secured its position amongst the top five global aluminium majors with a production and business footprint in 13 countries worldwide.

Excerpts from the interview:

Alcircle team: Please, tell us in brief what is happening in Hindalco, about the new projects that are coming up and the focus on recycling and downstream sector.

Mr. Sachin Satpute: I would like to talk more from the marketing point of view. Hindalco is growing in all chains- in alumina, aluminium and the downstream products. We have Utkal Alumina coming up, we have commissioned Mahan smelter where we tapped first metal last quarter and we have Aditya aluminium on the cards with 360 ktpa. We are also growing in flat rolled products. We have a new mill, a new business, coming up at Hirakud. Basically, we acquired a hot rolling mill from Novelis UK, revamped it, brought to India and now we have a state-of-the-art cold rolling mill and finishing line in India. The unit is supporting products that are mostly imported, which India is still not equipped to produce. These are high strength, good quality products that are used in US, Australia and the European market.

I would also like to talk about can stock here. Aluminium flat roll products provide 33% of the total aluminium consumption and in US, aluminium can itself, is around 50% of the total flat roll products, whereas in India it is close to zero. However, as a recyclable and a green product, Hindalco sees a huge growth potential for can stock in India. But the can stock has to be manufactured locally. There was a time when a can of coke was overtly expensive in India when the country used to import cans from Korea, Dubai or Thailand. Of course now it has become cheaper, as India now imports can stock instead of finished cans. Good news is that can lines like Rexam and Canpack have set up production units in India recently. So, we thought, producing can stock in India would make the process much more economic and easier. So, here we are, just a few months away from producing can stock in India itself.

With the localization of can stock, I’m sure the can market in India would also grow. At present, Indian demand is 1.2 Billion Cans, which is nothing compared to around 100 Billion Cans in US and around 20 Billion Cans in China. However, There is a huge scope of application development in the can market in India. Only when the producers like Hindalo start investing on downstream products, the value added products, the application would get supported and the overall aluminium consumption rate would go up in India. That is the reason Hindalco has been attempting at maintaining a balanced product profile from primary metal to semis and support the all-around growth in production of value added consumer and downstream products.

Alcircle team: The general perception is that aluminium sector both In India and worldwide is passing through a recessionary period. How would you react to that?

Mr. Sachin Satpute: Yes, globally, aluminium is going through a low phase. But, aluminium market India is still growing at a rate of 9 to 10% over the last five years and I expect it to remain so in the near future. Globally the growth is 4 to 5%, for China, it is 8 to 9%, but, India is growing faster because of the strong focus in electrification. 41% of aluminium consumption in India goes to electrification and India still has loads of infrastructural opportunities; a number of villages are still to be electrified. This will help the aluminium sector grow in double digits from 9 to 10%. Yes, the present quarter is a little soft. But I’m still bullish about the aluminium market in India. Two things would definitely boost the aluminium industry in India: firstly, the electrification and infrastructural sector and secondly, investment on the downstream sector. Downstream application development by Hindalco like pressure cooker, roofing, bicycle or gas cylinder will definitely boost the market. India has a very low per capita consumption of aluminium with just 2.2 kg against the global average of 9.2 kgs. When we invest on the downstream capacity it will definitely help to raise the per capita consumption to a considerable range.

Alcircle team: As you would be aware, AlCircle is a global e-portal for aluminium. Do you think that as an online media it has an advantage over visual or print media in promoting your products and services?

Mr. Sachin Satpute: Digital Marketing is the new area where we are also now increasing our focus. We have B2C products and new applications and I’m considering digital marketing strategy for Hindalco. We are also considering the possibility of advertising through digital media. From the metal and aluminium prospective, print media still has an upper hand. But, three to four years down the line, digital media will play a key role here and I’m definitely optimistic about it.

Alcircle team: Coming to e-commerce, do you think that it is the right time for the aluminium industry to adopt e-commerce into its marketing structure?

Mr. Sachin Satpute: It should, definitely. But the possibility is still further away, may be 7-10 years down the line. The e-commerce volume for aluminium is still paltry in comparison to the physical volume of the business. China is doing some experiment with B2B for aluminium, but the volume is still nothing compared to the huge aluminium production there. E-commerce works great for retail market, but for metal, people still prefer to see and feel the product before putting an order. I will say e-commerce is still ahead of time for aluminium. But, yes, it has tremendous possibilities in times to come.


Disclaimer: “The information presented herein is neither intended nor implied to be a substitute for professional advice. The views and opinions shared in the interview section of www.alcircle.com are unique to the interviewees and do not necessarily reflect the viewpoint of www.alcircle.com.”