Business Ideas for Beginners in India

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The Indian Aluminium Industry is a highly concentrated industry that stands as the second-largest producer across the world. With the top 5 companies constituting the majority of the country's production, it has a share of nearly 5.3% of the global aluminium output.

   
The aluminium industry in India is thriving at an enviable pace considering its growing demand. Export of primary aluminium from India has witnessed a rapid rise over the years and the share of exports in aggregate production has risen to 54% in FY20 from 46% in FY16.

India's primary aluminium exports increased approximately 50% during the first quarter of FY21. With the ease in COVID-19 restrictions in the country, exports grew by just 6.8% y-o-y in Q2 in regards to 50% growth in the June 2020 quarter.

India's per capita aluminium consumption of 2.5 kg is in contrast to the worldwide average of 11 kg and 24 kg in China. According to the NITI (National Institution for Transforming India) Aayog, enhancing India’s per capita use to the global average will require an extra annual aluminium use of 16 million tonnes. The industries that require aluminium in the country most include power (44%), consumer durables, transportation (10-12%), construction (17%) and packaging etc.

The Background

Though the existence of Aluminium was first established in the year 1808, it took almost 46 years to make its production commercially viable. The research work of several years resulted in extracting the aluminium from the ore. Aluminium is the third most available element in the earth's crust constituting almost 7.3% by mass. Currently, it is also the second most used metal in the world after steel. Due to the consistent growth of the Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side.

The production of aluminium started in India in 1938 when the Aluminum Corporation of India's plant was commissioned. The plant which was set up with a financial and technical collaboration with Alcan, Canada had a capacity of producing 2,500 tons per annum. Hindustan Aluminum Corporation (Hindalco) was set up in Uttar Pradesh in the year 1959. It had a capacity of producing 20,000 tons per annum. In 1965, a public sector enterprise Malco which had a capacity of 10,000 tons per annum was commissioned. By 1987, the National Aluminium Company (NALCO) was commissioned to produce aluminium. It had a capacity of producing 0.218 million tons.

During the 1970s, the government started regulating and controlling the Indian aluminium industry. Restrictions in entry and price distribution controls were quite common in the Indian aluminium sector. An Aluminium Control Order was implemented where the aluminium producers had to sell 50% of their products for electrical usages. However, in 1989, the order was removed as the government decontrolling was revoked. With the de-licensing of industry in 1991, the liberal import of technologies and capital goods was started. The liberalization resulted in a growth rate of 12% of the industry, compared to the growth rate of 6% during 1980.

Aluminium Production in India

Aluminium is a strategic metal that propels India's GDP. It opened more than 8 lakh jobs directly and in-directly and developed over 4000 SMEs in the downstream sector. The nation has a huge reservoir of Bauxite with a Bauxite reserve, and it needs to increase bauxite production from 23 million tons in the fiscal year 2019 to nearly 70 million tons by the fiscal year of 2030-2032 to meet the future demand.

The Production

India lies at the second position in the list of leading primary aluminium producers in the world. India saw significant growth in aluminium production in the past five years. In 2006-07, the production target of aluminium in India laid by the Ministry of Mines, Government of India was 1,153 KT, which was augmented to 1,237 KT in the next year (2007-08). Due to the growing demand from the construction, electrical, automobiles and packaging industry, the production of aluminium also hiked up. The combined aluminium production in India stood at 3.6 MT in FY20.

The Consumption

After a stagnant consumption of primary aluminium in India from the end of 1990s to 2002 (when the consumptions were between 500 – 600 KT), it started rising sharply in 2002. The consumption reached 1,080 KT in 2006. The consumption of aluminium in India is dominated by the industries such as power, infrastructure, transportation and others.

The Major Players

The Indian aluminium industry is dominated by four or five companies that constitute the majority of India's aluminium production.

Following are the major players in the Indian aluminium industry:
  • Hindustan Aluminium Company (HINDALCO)
  • Sterlite Industries
  • Sacheta Metals
  • Jindal Aluminium
  • National Aluminium Company (NALCO)
  • Bharat Aluminium Company (BALCO)
  • MALCO
  • INDAL
HINDALCO: Hindalco is the biggest player in the aluminium industry in India with around 39% of the market share. An Aditya Birla Group flagship company, Hindalco has its aluminium plant at Renukoot in Uttar Pradesh. It has various aluminium products with a market share of 42% in primary aluminium, 20% in extrusions 63% in rolled products, 31% in wheels and 44% in foils.

Sterlite Industries: The aluminium business of Sterlite Industries Limited comprises two Indian aluminium giants – BALCO and MALCO. While BALCO is partially integrated, MALCO is a fully integrated producer of aluminium. Sterlite has got a market share of around 32%.

Jindal Aluminium: It is the primary manufacturer of aluminium extruded profiles in India. It contains 1,00,000 tonnes per annum installed capacity (as per Indian Minerals Yearbook 2013-2014 data) and 10 aluminium extrusion presses and is capable of producing a wide range of aluminium extruded profiles. It has a nearly 30% market share in India.

NALCO: It is also one of the leading aluminium producers in India. The Government of India has a stake of 87.15% in this company. Its aluminium refinery is located at Damanjodi. It also has a smelter located at Angul, Orissa. Currently, NALCO is concentrating on a Capex programme to increase its production from 345,000 tonnes to 460,000 tonnes.

Sacheta Metals: It is a public limited company that manufactures and exports a varied range of aluminium household products, namely articles, plate sheets, coils, foils and PP closure stocks. The manufacturing unit of the company is located in Sacheta Udyog Nagar in Talod, Gujarat. According to the financial result for the three months ended September 30, 2016, Sacheta’s income from operations stood at INR15.17 crore and PBIT (profit before insurance and tax) was INR0.38 crore. It is embedded with a modernised and sophisticated mill and stands to cater to the Indian aluminium household appliances market in the best possible way.

Aluminium Companies in India

  • Hindalco
  • Hindustan Zinc
  • PG Foils
  • Jindal Stainless
  • Kennametal India
  • NALCO
  • Malco
  • Ratnamani Metals
  • Sacheta Metals
  • Sujana Metal Products
  • Golkonda Alum
  • Century Extr
  • Manaksia Alumin
Companies in India
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Last Updated on September 07, 2021