Indal plans to expand smelter capacity

Captive power for Hirakud, Kerala plants

Indian Aluminium Company (Indal) is planning to invest Rs 700 crore over the next two years to set up two captive power units and expand smelting capacity.

S K Tamotia, chief executive officer of Indal, said the company was looking at building a 100 mw unit at its Hirakud plant in Orissa and another 40 mw plant at its Kerala unit.

"We are also weighing options to expand smelting capacity at Hirakud by 35,000 tonne," he said.

While the captive units will cost around Rs 350 crore, the capacity expansion will cost a similar amount. The expenditure would be met by internal accruals, Tamotia noted.

Rising cost of power is a serious concern for the company as electricity is a critical raw material for smelting process.

The company's Kerala plant is lying idle as the state electricity board jacked up the electricity tariffs.

"For us Rs 2.5 per unit is viable, while the SEB was offering Rs 3.35 per unit. We have given three options to the Kerala government. Either it should allow to set up a captive power plant or give permission to wheel electricity from Power Trading Corporation (PTC). If they object to both the plans, we should be given a green signal to close down the plant permanently," Tamotia said.

The company claimed that it can produce electricity below Rs 1.5 per unit at its captive plant. Asked if the state government has responded to proposals, he said company was still waiting for a reply.

At Hirakud, Indal has a 67.5 mw plant and it is setting up another 100 mw plant there to meet the present requirements.

"When we expand the capacity to 100,000 tonne from the current 65,000 tonne, another 100 mw plant would be set up," he informed.

The company has also sought permission for wheeling power to its plant in Belur, West Bengal, from Hirakud. "We will require merely 8 mw of electricity at Belur," he said.

Asked about possible merger with Hindalco, he said it might not be needed if VAT came into being. "In any case, the Indal brand will continue since it commands good premium in the market," he noted.