Aditya Birla Group Will Double Capacity
MUMBAI: Birla group stealing a march over rival Vedanta Resources that was recently forced by the government to halt similar expansion, the Aditya Birla group will double capacity at its alumina unit in Orissa after receiving environmental clearance.
A key raw material for making aluminium, Aditya Birla group company Utkal Alumina currently has the capacity to make 1.5 million tonnes of alumina. Debu Bhattacharya, managing director of the group flagship Hindalco Industries, said, “We went to the environment ministry for an approval for the expansion and we have got it”.
As it not only gives a higher capacity for conversion into aluminium metal, but also offers opportunities to boost profitability by selling it in the open market.
Expansion of alumina refineries is integral to metal companies such as Utkal Alumina and Vedanta Aluminium. Asia’s largest producer of alumina is the state-run National Aluminium. For Utkal Alumina, Bauxite comes from its own mines located at the Baphlimali hills in Raygada district of Orissa.
As Anil Agarwal-controlled company currently has capacity of 1 million tonnes at Lanjigarh, the move by the Birlas will likely push Utkal Alumina ahead of Vedanta Aluminium in the alumina league table. To take the capacity to 6 million tonnes, Vedanta had started work, but in the last month the work was stopped as it had not sought prior approval for the expansion from the central government.
Aditya Birla group’s aluminium smelters in Mahan in Madhya Pradesh will feed Alumina from Utkal. For the Utkal Alumina project, Hindalco had recently tied up $1.05 billion in loans. In the second quarter of 2012 it is scheduled to start production. For its Greenfield and expansion projects in the metal space, Hindalco has also earmarked a spending of about Rs 40,000 crore.
Kumar Mangalam Birla, while speaking to shareholders at an annual general meeting on Friday, asserted smelters expansion at Hirakud from 155,000 tonnes to 161,000 tonnes was progressing and in the second quarter it was slated for completion.
Mr. Birla said, Novelis which was purchased by Hindalco in 2007 for $6 billion, showed good results in terms of free cash flow, liquidity and adjusted EBITDA. Mr. Birla said, while referring to the Hindalco financing plans, he pointed out that through a qualified institutional placement issuance the company had raised $600 million.
