Kumar Mangalam Birla says US-China trade war to hit Hindalco's India biz

US-based Novelis business to remain unaffected due to trade war

Kumar Mangalam Birla, chairman of Hindalco Industries, the country's largest aluminium producer, on Friday raised concerns over the ongoing trade war between the US and China, which would mean increased aluminium imports further hurting the domestic aluminium market.   

"Nearly 50 per cent of the total domestic aluminium demand is being met via aluminium scrap and this is a big concern for Hindalco's domestic business," Birla told shareholders on Friday at the company's 59th annual general meeting held in Mumbai. 

He, however, ruled out any impact of the same on its US-based subsidiary Novelis Inc, one of the leading companies in rolled aluminium products and recycling, and the largest global producer of automotive and beverage can sheet.

"Novelis has operations in both the US and China and caters to the market surrounding the operations. Due to this, there is no major impact of the trade war on this business. The concern is only for Hindalco's India operations," explained Birla. 

Aditya Birla Group's Hindalco Industries, state-owned National Aluminium Co and Anil Agarwal-led Vedanta Ltd are the top three players of the domestic aluminium industry. Their combined annual output of 4 million tonnes (MT) can cater to the entire domestic market, where consumption is usually 3.1-3.6 MT. 
 

Excess production is exported by these companies. In such a situation, aluminium imports into India become totally non-essential.

On the outlook for its business, Birla said the company has a strong focus on strengthening the balance sheet through deleveraging, allocation of capex towards growth strategies and generating positive free cash flows. It will also continue to increase its share in the value-added product segment in both the businesses -- copper and aluminium. 

With regard to the performance of UK-based Jaguar Land Rover (JLR), which is currently going through a trough, Birla assured shareholders that though the company is one of the key automotive customers for Novelis in the region, it also has several other marque customers in the region and hence overall there will be no impact on the business of Novelis due to JLR. 

Focusing on recently acquired Aleris, Birla said, "The acquisition adds to Hindalco's ability to bring in the latest capabilities in aluminium value-added products to India. Given its synergy with Novelis, Hindalco is poised to capture this growth in the future. Further, Aleris' expertise in this segment will give Hindalco's India Aluminium value-added products business an edge over local competition, also enabling it to compete with global players foraying into the lucrative Indian market." 

Meanwhile, shareholders thanked the chairman for the dividend announcement of Rs 1.20 per share for FY18, and requested for bonus shares next year to mark the 60th annual general meeting of the company.