Guess what is the connection between Soccer World Cup 2014, Olympics 2016 and Hindalco? Well it is the beer can.
Keeping in mind the two major global sporting events in Brazil, Hindalco’s wholly owned subsidiary, Novelis is creating large capacities in the South American country products of which will go into the making of beverage cans.
The 220,000 tonne aluminium rolling facility which produces sheets of the metal is expected to be commissioned by the end of this calendar year but will ramp up production up to 2014. Also coming up in Brazil next year is a recycling plant which will produce 190,000 tonnes of sheets from recycled aluminium, mostly used beverage cans.
Mr Philip Martens president & CEO of Novelis said that the upcoming facility will provide a meaningful contribution to our fiscal 2014 results. This expansion is coming at a perfect time, ahead of Brazil’s 2014 World Cup and 2016 Olympics which will drive significant beverage consumption in the region.”
Novelis, USD 11 billion company, which operates out of 11 countries, has a total capacity of 3 million tonnes of aluminium sheets. The company is now expanding mainly in 3 countries Brazil, China and South Korea. The 220,000 tonne recycling facility in South Korea is expected to be commissioned next month.
While it is not clear as to what meaningful contribution the 220,000 tonne Brazil plant would make to Novelis’ operations and in turn, to Hindalco’s fortunes, the point about the beverage can underscores the importance of Novelis to Hindalco.
In the Q1 of the current year, the only spot of cheer in Hindalco’s results was the performance of Novelis ironically because when the North American company was acquired by the Aditya Birla group in 2007 it was neck deep into debt and saddled with unviable fixed price contracts.
Novelis is putting up 890,000 tonnes of rolling capacity and 810,000 tonnes of recycling capacity. It has truly aspirational goal of coming to a level where 80% of its products are from recycled material.
A recent research report of Edelweiss said that Hindalco’s standalone EBITDA disappointed due to production issues and sustained cost pressures. Novelis remained the bright spot having posted an EBITDA of USD 259 million and guided for further improvement going forward.
Source - Business Line.com
(www.steelguru.com)
