Hindalco plans to consolidate existing and new operations

Hindalco Industries Ltd, India’s second largest aluminium producer, wants to consolidate its existing and new operations rather than rush to buy mines overseas, a strategy that stands in contrast to plans of other metal companies that believe that falling commodity prices present a good opportunity for them to secure assets.

“We have everything here...we have bauxite, we have coal. And that is why we are going (with our projects) here with our greenfield exercise,” Debu Bhattacharya, managing director of Hindalco and vice-chairman of Novelis Inc., Hindalco’s US unit, said on the sidelines of a conference on Tuesday to announce quarterly earnings.

Hindalco wants to first make sure the cash flows from new projects start flowing in as expected, that investments are justified and risks put behind which would take a couple of year, according to a person familiar with the strategy, who declined to be identified.

Till then, Hindalco is unlikely to “have a major appetite for any big acquisition,” the source said.

Hindalco is seeing trial production at its 359,000 tonne Mahan aluminium smelter in Madhya Pradesh. Its Aditya aluminium smelter in Orissa, of the same capacity, is in an advanced stage of completion. Besides, it is increasing capacity at existing units in Hirakud in Orissa and Muri in Jharkhand.

The company’s total capital employed in the aluminium business was Rs.33,057 crore as of 30 June, Hindalco said in a statement on Tuesday.

Steel companies are flooded with offers to buy iron ore and coking coal assets overseas and mining companies such as Coal India Ltd and NMDC Ltd are also in the race for overseas units in the backdrop of rising demand for raw materials in India.