The Aditya Birla Group has chalked a plan to expand capacities of all its companies globally — including Novelis, Hindalco and UltraTech — which would raise the group’s turnover from $40 billion to $65 billion in two years. The look-abroad policy also includes the acquisition of a mid-sized chemical or a fertiliser company in North America.
The group, which is investing $750 million (Rs 4,115 crore) in expanding the capacity of Novelis globally, is expecting new projects worth $15 billion in India — including Mahan aluminium project, Aditya Aluminium, Utkal Alumina and UltraTech’s cement capacity expansion — will help it meet the $65-billion target set by Chairman Kumar Mangalam Birla.
Addressing a closed-door meeting of Owners’ Forum on Monday in New Delhi, Birla said India was very much at risk of losing its edge if the policy did not get better, and he would prefer a three-year policy rather than annual budgets. “Delays of two to three months are the norm in India right now, and it has been noticed by our group, which operates in 36 countries, that none is as in-transparent and uncertain as India,” he reportedly told the gathering. (NOVELIS: ON GROWTH PATH)
The aggressive expansion abroad results from procedural delays in India, making project expansion difficult. Tatas and Cipla, earning more than half their group revenues from outside the country, are among the companies looking abroad, as red tape, high interest rates and a slowing economy restrict expansion in India.
Aditya Birla sources told this newspaper that the group had decided to invest close to $750 million in capital expenditure for Novelis across the world; its $350-million Pinda facility in Brazil was commissioned in December last year. The group would invest $250 million in the Novelis facility in Nachterstedt, Germany, and $100 million in China. The group is also looking at opportunities abroad in the mining and metal sector for expansion. It plans to invest $250 million (Rs 1,370 crore) in Canadian pulp mill Terrace Bay, which it acquired for $110 million (Rs 600 crore).
Apart from Novelis, the group — which acquired Canadian pulp mill Terrace Bay for $110 million (Rs 600 crore) — will be investing $250 million (Rs 1,370 crore) in the company.
The subsidiary group faced a lot of delays in its greenfield projects — Utkal Alumina project in Orissa and Mahan aluminium project. But Hindalco officials said both projects would be commissioned by June and would add to the top line. The increased investment in Novelis comes at a time when the aluminium can market in the US has become very competitive and there is a pricing pressure in Asia.
(With inputs from Bloomberg)
