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Industry structure The aluminum industry can be distinctly divided into primary metal producers and downstream metal producers. The integrated aluminum manufacturers like Hindalco, Balco, Malco and Indal have got a substantial presence in the down stream aluminum market. Primary metal producers contribute to approximately 89 % of the metal production in the country. Re-rollers or scrap recycling units produce the rest. Primary metal producers are integrated in the sense that they manufacture aluminum from bauxite since they have bauxite mines with large reserves in their possession. Trends In Capacity (000 ton) Year Hindalco Nalco Balco Indal Malco Total 1990-91 150 218 100 117 25 610 1991-92 150 218 100 117 25 610 1992-93 150 218 100 117 25 610 1993-94 150 218 100 117 25 610 1994-95 150 218 100 117 25 610 1995-96 210 218 100 117 25 610 1996-97 210 218 100 117 25 610 1997-98 242 230 100 117 25 654 The total installed capacity in FY98 was 0.65mn tpa. Though Indal's total primary aluminum capacity is 117,000 tpa, its operational capacity is only 50,000 tpa. The Belgaum smelter has been non-operational for the last 36 months due to power problems and the company has recently decided to close down the smelter. Value added metal producers manufacture aluminum products by purchasing either primary metal from the integrated aluminum producers or by importing the same from the international markets. Integrated producers with a presence in value added products are in a better position to capitalize on this value addition when compared to stand-alone producers. The regular supply of primary aluminum metal, the price volatility in primary aluminum procurement and the depreciation of the rupee (in the case of imported metal) are the key factors that affect the viability of downstream producers. The downstream aluminum producers are also plagued by the high import duty content of primary aluminum. Currently the import duty on aluminum is 27.5%, which#includes the 10% surcharge imposed in the recently concluded budget. The table below depicts the landed price of primary aluminum in different scenarios. From the table it is clear that the primary aluminum producers are relatively protected, whereas the downstream producers have to bear the brunt of high import duty. Effective Landed Price in Different Scenario (Rs/ton)      Rs38/$ Rs 40/$ $/Ton 15% 20% 25% 15% 20% 25% 1,500 69,736 72,768 75,801 73,407 76,598 79,790 1,550 71,943 75,071 78,199 75,730 79,022 82,315 1,600 74,150 77,374 80,598 78,053 81,446 84,840 1,650 76,357 79,677 82,997 80,376 83,870 87,365 1,700 78,564 81,980 85,396 82,699 86,294 89,890 1,750 80,771 84,282 87,794 85,022 88,718 82,415 Value added downstream products are available in various forms viz (a) Rolled products (b) Extruded products (c) Foils (d) wire rods and (e) Aluminum wheels used in automobiles etc. Integrated producers like Hindalco and Indal have significant presence in downstream products. Capacity Of Rolled Products Company Capacity(ton) Hindalco 80,000 Indal 90,000 Balco 40,000 Malco 7,000 Pennar 30,000 Sterlite 20,000 Light Metal 10,800 Others 15,000 Total 292,800 Rolled products are manufactured by rolling slabs to the required thickness and coiling them. The coils are further slit into the required width. Rolled products are used in manufacturing aluminum foils, pressure cooking sheets, building sheets and flooring sheets used in transport. The current installed capacity of rolled products is to the tune of 0.29mn ton. Integrated aluminum producers (with the exception of Nalco) having a capacity of 0.21m ton contribute to nearly 75 % of the aggregate capacity. Indal with a production capacity of 90,000 tpa is the largest producer of rolled products in the country, followed by Hindalco (80,000 tpa) and Balco (40,000 tpa). Other producers in the manufacture of rolled products are Sterlite Industries, Pennar Aluminum, Light Metal Industries (merged with India foils in December 1997). There also existed re-rolling mills who collectively supply around 1,00,000 ton of rolled products The rolled products market to a large extent is dependent on a strong economic growth and resultant rise in demand Capacity Of Extruded Products Company Capacity(ton) Hindalco 10,400 Indal 8,000 Balco 7,000 Malco 2,000 Alexcon 5,000 Century 5,400 Mahavir 7,600 Orissa 7,200 Pennar 6,250 Sudal 5,900 Others 69,300 Total 135,050 When aluminum ingots are passed through the extrusion process they are known as extruded products. Extruded products are available in the form of bars, tubes and other long products. Hindalco, Balco, Malco and Indal together account for 20% of the totaled installed capacity. Capacity of foils Company Capacity(ton) Hindalco 5000 Indal 6000 Balco 500 India Foils 19,000 Sterlite 5000 Annapurna Foils 4000 PG Foils 5000 Others 15,000 Total 56,100 Foils are aluminum sheets of 0.2mm thickness. Foils are mainly used by the packaging industry as aluminum offers high resistance to moisture. Major users of aluminum foils also#include pharmaceutical strips, interlining of tetra packaging, processed foods, cable manufacturers, cigarette manufacturers and household food. India Foils and Indal control 65% of the foil market. India Foils (capacity 19,000 tpa) is the leading producer of aluminum foils. Other manufacturers having a significant presence are Hindalco (capacity 5,000 tpa), Indal (capacity 6,000 tpa) and Sterlite (5,000 tpa). Value addition, which can be defined, as the additional processing required from primary aluminum stage is reflected in higher price realization of different products. Category Value addition(%) Rolled 25 Extrusion 48 Wire Rods 11 Foils 190     Other sector reports Previous chapter Next chapter

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