The market knows best, thus goes
the old adage. Those who do not respect this learn to do so. It is nice
to be a scarce commodity - much in demand. Aluminium producers have witnessed
a steady off take and even end users have maintained regular demand during
the year.
The aluminium industry which emerged
in India in early 1940s (almost half a century later to its invention)
and has today, a history of over 5 decades during which period the installed
capacity has remarkably grown from 2,500 tonnes in 1943 to 7,14,000 tonnes
in 1997-98.
Aluminium production in the country
has also progressively gone up from 4,045 tonnes in 1950-51 to 5,53,644
tonnes in 1997-98 both in private and public sector, although the capacity
utilization suffered in the past due to non-availability of power to the
industry. However, of late the industry has set up Captive Power Plants,
thereby reducing the dependence on State Electricity Boards and the production
is, therefore, expected to reach a level of about 5,50,000-6,00,000 tonne
per year during the 9th Plan period.
The discovery/confirmation of huge
bauxite reserves - the ore for making aluminium, in the East Coast has
brought about dramatic changes in the Indian aluminium scene. New ventures
are envisaged in the coming years in the aluminium industry.
In terms of per capita consumption,
India's figure of 0.5 kg. is far behind as compared to industrially developed
countries viz. 27 kg. in U.S.A. While the demand in the western world is
evenly distribute across usage sector, the same is not true for India.
Three key factors i.e. Aluminium Control Act (1970), high prices of aluminium,
and increased availability of substitutes have been responsible for shaping
the consumption pattern.
The Aluminium Control act (1970)
stipulated that 50% of the aluminium production by any manufacturer should
be of the Electrical Grade (EC) and it fixed the retention prices for this
grade of aluminium. Hence, the demand became skewed towards this relatively
low growth usage sector. Also, the application of administered prices meant
that the prices of other aluminium products became artificially high. This
led to lower growth in demand from other user sectors. The high price of
aluminium products encouraged the use of substitutes, mainly steel and
plastics, in key usage sectors like construction, transport and packaging.
the ratio of price of aluminium to price of steel was as high as 6.7. This
inhibited the penetration of aluminium into end use applications where
the chief substitute is steel.
Since de-regulation in 1989, however,
the aluminium sector has seen a significant shift in consumption patterns.
The share of the electrical sector has dropped to 37% in 1996 (from 52%
in 1980), while there has been a rise in the share of the transport and
construction sectors. With demand for more fuel efficiency in motor vehicles,
the usage of aluminium should continue to improve in the transport segment.
The total production of aluminium
in India is accounted for by five producers, namely NALCO, HINDALCO, INDAL,
BALCO and MALCO. These producers are integrated producers from bauxite
mining to metal production. The high capital cost of setting up an aliminium
smelter (at around US $ 3300/ton) and the need of a Captive Power Plant,
have restricted production only to these producers.
|
COMPANY
|
INSTALLED CAPACITY
|
PRODUCTION (1997-98)
|
|
NALCO
|
230,000
|
200,162
|
|
HINDALCO
|
242,000
|
200,607
|
|
INDAL
|
117,000
|
38,600
|
|
BALCO
|
100,000
|
88,198
|
|
MALCO
|
25,000
|
26,077
|
|
TOTAL
|
714,000
|
553,644
|
|
Production has grown by 5.85% in 1997-98
over the previous year.
For the period Financial Year 1981
to Financial Year 1997, Demand growth registered a CAGR of 4.3%. The CAGR
during the period 1991-97 was higher at 4.9% (post de-regulation) and in
the period Financial Year 1994 to Financial Year 1996), it clocked a double
digit growth of 11%, drive by a rebound in the economy. The aluminium sector
also capitalised on an average growth rate 25% in the automobile sector
during this period. The growth in domestic demand dropped sharply in 1998-99
by 5% whereas Aluminium exports declined by 14.33% over the previous year.
This slump can be attributed to the general slowdown in all sectors of
the economy.
With economic growth expected to
pick up through fiscal 1999-2000 and the prospect of economic growth being
sustained at high levels, we expect a growth in demand for aluminium in
the domestic market in the nest three years. World consumption is also
set to accelerate with a CAGR of 3.1% projected till the end of this century.
The Working Group of the Planning
Commission has set up the following average annual growth rates upto 2005
AD.
| IX |
Plan |
1995-96 to 1999-2000 |
7.5% |
| X |
Plan |
2000-01 to 2004-05 |
7.0% |
It is also planned to make a provision
of 10% of the domestic demand for export. The planning for marginal surpluses
for export will provide the country -
-
a niche in the international trade other
dominated by multinational corporation
-
a cushion in the overall production
to manipulate fluctuations in internal off-take of the metal noticed repeatedly
in the past; and
-
valuable foreign exchange desirable
through the export of the end product of the process chain.
On the supply side, there are no major
capacity additions coming up in the near future.
While taking stock of the aluminium
Industry in India, one is tempted to telescope back t6o 32 years, when
the Government translated its idea into practice of having aluminium in
the core of Indian Industry. The Bharat Aluminium Company Limited (BALCO)
which was established as the first PSU in the Aluminium Industry on November
27, 1965 heralded the beginning of a new era. The foresighted policy of
the Government to produce aluminium in the public sector is now bearing
fruit. Since 1984, BALCO has been producing consistently at a near full-rated
capacity level, providing sustenance to vital industries in the Electrical
Transport, Canning and Packaging, Consumer Durable, Architectural, Defence
and Space Research Sectors by releasing about, 95,000 tonnes of metal per
year in the market. It is a happy consummation of its efforts that the
Company has been making consistent profits since the last decade.
In over 50 years of existence of
aluminium industry in India, the R&D activities have rather been at
a very low key, mainly because of establishment of establishment of all
production facilities based on foreign know-how, technology, basic engineering
including subsequent technical support to further improve operating performance.
However, BALCo has proved its mettle by developing and supplying nearly
90% of the special aluminium alloys required for the intermediate range
ballistic missile successfully testfired in May, 1989 and subsequent successful
testfiring of Agni-II in April, 1999. The Company has also been a proud
partner in the development of the surface-to-surface missile Prithvi by
developing and supply aluminium alloys required for it. BAKCO's sharp eye
for development could be witnessed when it emerged as the first in the
Indian aluminium industry to produce alloy rods, which is a feed stock
for All Aluminium Alloy Conductors (AAA Conductors) very much in need for
today's power transmission lines.The Company has also developed capabilities
for production of sophisticated alloys with copper and zinc and other harder
groups for aircraft, defence, and other industries. Billets and some of
its rolled and extruded products can be manufactured in these alloys.
BALCO is now modernising its Cast-House
and Fabrication Plant at an investment of Rs.157 crores by installing a
Strip Caster and Cold Rolling Mill to produce thin-gauge aluminium sheets.
This will increase the Company's share in the aluminium rolled product
market and will augment its profit and increase sales turn-over to cross
the 1000 crore mark.
50 years of Indian's independence
sees Bharat Aluminium Company Limited(BALCO) as Pd.Jawaharlal Nehru's dreams
come true. The ascendancy of the first Public Sector in the Aluminium industry
to a position of 'commanding heights" can be gauged from the fact that
the Company did the entire project report for the eastcoast project now
known as National Aluminium Company limited(NALCO). The aluminium industry
in India is now set surge ahead in the years to come. |