Hindalco Industries, the world’s leading supplier of aluminium to car makers, is planning to double its group sales to $ 33 billion in the next five years as Audi and other European automobile brands are opting for aluminium instead of steel.
Following the league, Jaguar Land Rover (JLR) has employed efforts to start the sales of its first purely aluminium-made Sports Utility Vehicle (SUV), Range Rover, from September 2012. The move by the car maker will curtail the net weight of the model by almost 39 per cent. Requirement of aluminium in Europe has been slated to rise by more than 25 kg per vehicle by the end of 2025, as reported by Novelis, a global aluminium supplier.
In June 2012, Novelis reported that it is a sole supplier of light weight aluminium to Daimler AG's Mercedes-Benz, Audi, JLR, BMW and several other stars of the auto industry. Owing to this, Volkswagen owned Audi and BMW witnessed a surge of 12.4 per cent and 7.6 per cent, respectively in its sales growth between January and July 2012. Another German auto maker, Mercedes-Benz has also been using aluminium for its € 93,534 SL model.
Hindalco acquired Novelis in 2007 in an attempt to get benefit from the 20 per cent of the top-end aluminium market. By the end of first quarter of fiscal 2012, Hindalco witnessed its largest drop of three years in profit revenues at the Indian operations, citing lower prices and increased costs as the prominent reasons on the London Metal Exchange. Meanwhile, Novelis saw a 20 per cent surge in its net income at $ 91 million during the period, according to a release issued on August 14, 2012.
During an interview, Debnarayan Bhattacharya, the Managing Director of India’s second largest metal producing company proclaimed, “Automobiles are a huge prospect. The European auto market is booming. New environmental norms are an opportunity for aluminium makers. At present we supply from our European unit.”
He also hinted that Hindalco’s present focus on auto mobile makers may be influenced if the government postpones its deadlines for regulating the carbon emissions.
Bhattacharya also serves as the Vice-Chairman of Hindalco’s Atlanta-based unit, Novelis. According to him, the car makers round the globe averagely use around 50 million metric tonne of steel annually (equivalent to the world’s total aluminium production capacity) and owing to the strict carbon emission regulations, global aluminium demand will further increase.
In the year ended March 31, 2012, the annual sales of Hindalco’s exceeded $16.4 billion. According to Bhattacharya, the company is currently seeking new resources for raw material outside India to achieve some cut-back in the cost of production. The company is also looking ahead to secure the raw material resources, including bauxite and coal, to run its ongoing and future projects, since both the materials account for almost 60 per cent in the manufacturing cost of aluminium.
