Vedanta scales down aluminium business, job cuts on the cards

Despite speculations regarding production cuts in Chinese smelters, global aluminium prices have shown no signs of improvement. This has forced India's Vedanta Group to scale down their aluminium business. They may also consider substantial job cuts to reduce overhead cost, said Abhijit Pati, CEO, Vedanta Limited.

Presently, about 1.5 million of India's annual aluminium demand is met through imports from the Middle East and China. Imports rose further to 390,000 tonnes in the last quarter from the same period previous year.

Rising imports from China and West Asia, moderate demand in the domestic market, and costlier raw materials and power tariffs have been adding to the concerns of aluminium players in India for a while now. Last week they approached the government to seek increase in import duty that would act as a breather.

India's per-capita consumption of the white metal is about 2.2 kg, compared with 25 kg in China. However, demand is growing at a rate of about 11 per cent per annum against global growth of 6 per cent. This makes India a potentially big market for the global aluminium marketplace.

Vedanta, controlled by Anil Agarwal, is running its main plant at one third of its capacity even as global output in the first half of the year soared significantly. This underutilization of capacity may hit the company's bottom line in the long run. To avoid that Vedanta is considering raising output to 1 million-1.2 million tonnes this fiscal year from 860,000 tonnes last year.

"If we are able to survive, if we are able to sail through, we would like to expand," Pati said.