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Hindalco Industries is betting on its downstream aluminium business to drive the next phase of growth, with the company expecting annual operating profit from the segment to increase by 15-18 per cent over the next five years.
{alcircleadd}According to Satish Pai, Managing Director of Hindalco Industries, the company is seeing strong opportunities in sectors such as transportation, energy storage, batteries and data centres, all of which are expected to increase their use of aluminium.
Pai said Hindalco began shifting more investment towards downstream operations in 2018 and is now entering a phase where it expects to benefit from those investments.
Unlike primary aluminium, which is heavily influenced by global commodity prices, downstream products involve additional processing and are made to meet specific customer requirements. This typically provides more stable earnings and better margins.
Hindalco is one of India's largest aluminium producers and has been expanding its portfolio of value-added products over the past several years. The company has outlined a capital expenditure plan of around USD 5 billion in India over five years, covering both upstream and downstream projects.
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Pai said the company expects improved returns from these investments and believes Hindalco's manufacturing capabilities could help it become a key supplier in several specialised product categories. The company is also looking to reduce dependence on imports and position India as an alternative manufacturing base.
The transport sector is expected to remain a major growth area as automakers increasingly focus on lighter vehicles and electric mobility, both of which use more aluminium than conventional vehicles.
Demand from renewable energy, battery storage systems and data centre infrastructure is also growing rapidly, where aluminium plays an important role.
Apart from industrial applications, the company is expanding its business through its Eternia brand with premium aluminium windows and doors.
Hindalco is aiming for INR 10,000 million (USD 104.86 million) revenue from the Eternia business by FY29 and is preparing to take the brand to new categories with aluminium modular kitchens among the next products.
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