Hindalco exports more than 80% of total output to minimise inventory build-up

Hindalco is exporting more than 80 per cent of the total output to minimise inventory build-up and to absorb plant fixed costs. Countries like Korea, the USA, Malaysia, Brazil, and Japan are leading importers of these products.

The demand from the domestic market is down due to the Covid-19 pandemic. Domestic aluminium consumption declined 6% YoY to 3.72 million tonnes in FY20 and 11% in Q4.

“We are exporting more than 80 per cent of our total output to countries like Korea, USA, Malaysia, Brazil, Japan, while minimizing our inventory build-up and absorbing the plant fixed costs. Our aluminium downstream plants in India had shut down initially, except at two plants, while other downstream facilities continued to operate and serve essential sector customers”, said Satish Pai, managing director of Hindalco Industries.

The company resumed downstream operations at reduced capacity to meet existing market demand.

Hindalco’s four aluminium smelters and the Utkal alumina refinery in India operated at near full capacity during the lockdown. The company’s coal and bauxite mines also operated at regular scale.

“The plant schedules are being adjusted to be in line with latest customer demand. All Capex (Capital expenditure), excluding maintenance and essential Capex for the next year, is being curtailed in India and Novelis. All businesses are focusing on fixed cost reductions and maintaining adequate liquidity to sustain plant operations in the current environment”, said Pai.

The demand for Flat Rolled Products (FRP) in Q4 and FY20 dropped on lower demand in transportation, electrical and building & construction sectors.

 “The continued slowdown across all user industries, such as electrical, automotive, building and construction were the primary reasons for the sluggish growth in consumption during the quarter. Domestic demand for aluminum in FY21 is likely to continue to be subdued. The government's recent announcement of a stimulus package of Rs 20 lakh crore and its thrust on infrastructure, housing and electrical sectors will help offset the negative economic sentiments post Covid to some extent”, Pai said.