Aluminium
Industry in India is a highly concentrated industry with the top 5 companies
constituting the majority of the country's production. With the growing demand
of aluminium in India, the Indian aluminium industry is also growing at an
enviable pace. In fact, the production of aluminium in India is currently
outpacing the demand.
Though
India's per capita consumption of aluminium stands too low (under 1 kg)
comparing to the per capita consumptions of other countries like US &
Europe (range from 25 to 30 kgs), Japan (15 kgs), Taiwan (10 kgs) and China (3
kgs), the demand is growing gradually. In India, the industries that require
aluminium 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 third most available element in the earth 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 Indian economy at a rate of 8%, the demand for metals, used for various sectors, is also on the higher side. As a result, the Indian aluminium industry is also growing consistently. In FY09, the aluminium industry in India saw a growth of about 9%.
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 ton per annum. Hindustan Aluminum Corporation (Hindalco) was set up in UP in the year 1959; it had a capacity of producing 20,000 ton per annum. In 1965, a public sector enterprise Malco which had a capacity of 10,000 ton per annum was commissioned; by 1987, National Aluminium Company (NALCO) was commissioned to produce aluminium. It had a capacity of producing 0.218 million ton.
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. 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 However, in 1989, the order was removed as the government decontrolling was revoked.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 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, comparing to the growth rate of 6% during the 1980.
Aluminium Production in India
India is world's fifth largest aluminium producer with an aluminium production competence of around 2.7 million tones, accounting almost 5% of the total aluminium production in the world. India is also a huge reservoir of Bauxite with a Bauxite reserve of 3 billion tones.
The Production
India lies at the eighth position in the list of leading primary aluminium producers in the world. India saw a 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. In FY 09, the total aluminium production in India was around 1.35 tonnes.
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 since 2002. The consumption reached at 1,080 KT in 2006. The consumption of aluminium in India is dominated by the industries like power, infrastructure, and transportation etc.
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)
- 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 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 of two Indian aluminium giants – BALCO and MALCO. While BALCO is a partially integrated, MALCO is a fully integrated producer of aluminium. Sterlite has got a market share of around 32%.
NALCO: It is also one of the leading aluminium producers in India. 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.