Hindalco up 4% after Novelis renews contract

Hindalco Industries climbed 4% to Rs 127.10 after Novelis Inc, also part of the Aditya Birla Group, renewed its can-body sales agreement with Coca-Cola Bottlers' Sales & Services Company (CCBSS).

A Novelis statement released late on Tuesday said the two companies had signed a multi-year agreement for the supply of aluminium can sheet. "The agreement covers the supply of aluminum can body stock, can end stock and can tab stock to the various producers of beverage cans for Coca-Cola in North America," it said, without disclosing the terms.

The contract continues a decades-long relationship between the two and maintains Novelis' role as the primary supplier of aluminum can sheet to Coca-Cola in North America. In 2007, a group of bottlers led by CCBSS filed a case against Novelis in Georgia, alleging breach of contractual terms. It is this case the two companies have decided to forgo and start the partnership afresh. The can contracts, which forced Novelis to sell at prices below its raw material costs to players like Coca-Cola, had cast a shadow on Novelis' profitability for long and was also responsible for its $2-billion loss in 2008.

Coca Cola and North America are most important companies and markets for Novelis. The company is the world's largest aluminium flat rolled products (FRP) maker, with nearly 20% market share.