Century Extrusions Ltd Management Discussions

Global economic overview:

Global growth has slight acceleration for advanced economies where growth is expected to rise from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025, will be offset by a modest slowdown in emerging market and developing economies from 4.3 percent in 2023 to 4.2 percent in both 2024 and 2025. The forecast for global growth five years from now at 3.1 percent is at its lowest in decades. Global inflation is forecast to decline steadily, from 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025, with advanced economies returning to their inflation targets sooner than emerging market and developing economies. Core inflation is generally projected to decline more gradually.

The Global Aluminum Extruded Products Market is anticipated to rise at a considerable rate during the forecast period, between 2022 and 2031. In 2021, the market is growing at a steady rate and with the rising adoption of strategies by key players; the market is expected to rise over the projected horizon.

According to the latest research, the global Aluminum Extruded Products market size was valued at USD 83.90 billion in 2023 and is expected to expand at a CAGR of8.2%. percent during the forecast period, reaching USD 90 billion by 2030.

Aluminum extrusion is a technique used to transform aluminum alloy into objects with a definitive crosssectional profile for a wide range of uses. The extrusion process makes the most of aluminums unique combination of physical characteristics. Its malleability allows it to be easily machined and cast, and yet aluminum is one third the density and stiffness of steel so the resulting products offer strength and stability, particularly when alloyed with other metals.

The market for aluminum-extruded products is growing due to increase in demand from end-use industries such as construction, machinery & equipment, automotive, and mass transport. The growth of this market is fuelled by the growth of its end-use industries. Along with the same, the rise in demand for sustainable & recyclable aluminum material has fuelled the market for aluminum-extruded products. Emerging economies such as India, South Africa, Brazil, and oil-centric GCC (Gulf Cooperation Countries) possess a great potential for the aluminum-extruded products market. Based on end-users, the automotive sector is expected to grow rapidly with the boom in the automotive industry and the increase in the use of Aluminum Extruded products by the automotive manufacturers. The increasing concern of the automobile users for greenhouse gas emissions is also contributing to the growth of the market. The growth of automotive sector in the Aluminum Extruded Products is also expected to be due to factors such as increasing emphasis on the lightweight cars and the introduction of various government initiatives for encouragement of foreign direct investments. China presently accounts for more 40 per cent of the global market share. During the forecast period it is expected to grow at a rate of 8 per cent. The increase in industrial consumption of extruded aluminium will drive the market in China. India is a fledgling market for aluminium extrusions. Current per capita consumption of aluminium extrusion here is amongst the lowest in the world. However, the country holds immense potential. Indias infrastructure is undergoing a major overhaul. Smart cities are coming up; metro railway networks are being built across Tier 1 cities. In addition, with the recent onslaughts of e-commerce, preferences of contemporary urban Indians are changing day in and day out. To keep pace with these changing socio-economic trends, core and ancillary industries such as aluminium extrusions are bringing out solutions that are global in their concepts, yet perfectly fitted for the local usage. It seems Indian aluminium makers are finally repositioning themselves in the global value chain. This was much needed given the cyclicality of aluminium business, capacity built-up from time to time, and price volatility.

With the Central government betting big on ‘Make in India, more aluminium extrusion manufacturers and suppliers are expected come on stream with the vision to grow through planned investment and strategic expansion. Aluminium extrusion market worldwide is highly fragmented with only a handful of big players dominating the spectrum. With demand for aluminium extrusion products growing stronger, more manufacturers and suppliers are expected to join the league. For that to happen a more conducive international trade environment is needed where there will be fair competition and faster adoption of technology across the borders.

This report elaborates on the market size, market characteristics, and market growth of the Aluminum Extruded Products industry between the years 2018 to 2028, and breaks down according to the product type, downstream application, and consumption area of Aluminum Extruded Products. The report also introduces players in the industry from the perspective of the value chain and looks into the leading companies.

IMPACT

COVID IMPACT

There is nothing new to discuss the impact of the Covid-19 pandemic, as nearly everyone in the world has been adversely affected by the pandemic. The aluminum extrusion market has witnessed a slight decline with the decline in the demand for automotive and construction needs, as the entire industry was stationed at a point. According to a report, the global construction market saw a sharp decline in the said period, which directly affected the progress of the aluminum extrusion market.

Along with this, the extended lockdown across the globe disrupted the global supply chain, which is the reason for the delays in imports and exports, causing huge production and demand & supply gap. Not only this, but the increased use of automation, artificial intelligence, and robotics are proving to be the major factor restricting the labor force and, in turn, making such extrusion processes take a break.

UKRAINE-RUSSIAN WAR IMPACT

The war in Ukrainehas not only affected the aluminum market but also various products in which aluminum is a vital component, from beverage and food cans to aerospace applications. These various applications are expanding and driving up aluminum demand year after year. As a result, the global aluminum market size has grown from 150 billion USD in 2020 to 152.3 billion USD in 2021 and is expected to reach 160.7 billion USD in 2022. Due to the anticipated growing demand, by 2027, the global aluminum market value is projected to reach 210 billion USD.

The war pushed the price of aluminum to unprecedented levels. For example, the aluminum price on the LME (London Metals Exchange) with the three-month contract peaked at a record $4,000 a ton in early March 2022, compared to $3,224 a ton in Februarymonthly average of the same year. Market prices have recently declined as price hikes discourage demand, but even in May2022, aluminum trades at the $3,300 level, which is 40% higher than the previous year.

There are multiple factors that have impacted aluminum prices. Firstly, and most importantly, oil price spikes had a detrimental effect not only on aluminum, but on all commodities. The Brent oil price was marked at around $80 per barrel at the beginning of 2022, but the price jumped from around $96 per barrel on February 14th, 2022, to around $123 per barrel on March 7th, 2022. More than four months after the start of military operations, the Brent price remains around $120 (June 2022).

Secondly, supply chain disruptions due to the Russian invasion increased the cost of shipping operations.

The ClarkSea Index (all shipping markets) shows a dramatic increase in the shipping rate from around $30,000 per 40-foot container by the end of January 2022 to over $40,000 in March.

Global Aluminium Market Outlook:

ALUMINUM MARKET - GROWTH, TRENDS, COVID-19 IMPACT, AND FORECASTS (2022 - 2027)

The Aluminium Market is Segmented by Processing Type (Castings, Extrusions, Forgings, Rods and Bars, Sheets and Plates, and Other Processing Types (including Pigments and Powders)), End-user Industry (Automotive, Aerospace and Defence, Building and Construction, Electrical and Electronics, Packaging, Industrial, and Other End-user Industries), and Geography (Asia-Pacific, North America, Europe, South America, and Middle-East and Africa).

Market Overview

The global aluminum extrusion market size was valued at USD 83.90 billion in 2023 and is expected to grow at CAGR of 8.2% from 2024 to 2030.

Aluminum extrusion is a process of shaping the aluminum with the help of an opening shaped in the die or mould as per the required end product. The said extrusion process applies a strong pressure on the aluminum to obtain the required sections through the directional deformation from an extrusion device. Once the extrusion process is completed, the extruded product is kept to cool down and processed forward to make it fully straight. Various kinds of products can be produced with the help of this extrusion technique, irrespective of the shape and size.

According to the automotive and transportation sector, aluminum content is rising in internal combustion and electric vehicles (EVs), which is expected to spur market growth over the forecast period. The regulatory requirements regarding the environmental impact of vehicles are putting increasing pressure on automakers to comply.

Key Market Trends

When segmented, according to the regions, the global aluminum extrusion market share is primarily divided into four major regions, namely - North America, Europe, Asia-Pacific, and Middle-East & Africa. The Asia-Pacific region is the most dominant region of all, with an estimated market value of USD 41,466 million in 2030 at a CAGR of 7%, from the early figures of 2021 that stood at USD 22,555 million.

The Asia-Pacific region is the most dominant, with the presence of major emerging economies and the overall growth ratio of the region. The rapid industrial revolution in the said region has led to an increase in demand for aluminum extrusion products, one of the most utilized products in the industry nowadays.

Europe is the second dominant region in the market of aluminum extrusion, accounting for USD 4,687 million in 2021 and expected to reach USD 8,402 million by 2030 at a CAGR of 6.7%. Europe being the key industrial region globally has varieties of industries operating in the region, with which the automotive is the major industry. So, it is pretty clear why the aluminum extrusion market growth has a significant market value in the European region.

The North American region is listed third with respect to the market value. North America accounted for a market share of USD 4,476 million in 2021 and is expected to grow to USD 6,944 million in 2030 at a CAGR of 5%. Middle-East & Africa and Latin America had a market value of USD 3375 million in 2021, and are expected to grow at 5372 million in 2030 at a CAGR of 5.3%.

Looking at the overall regional segmentation of the aluminum extrusion market, it is clear that the Asia-

Pacific region is dominating the world with major industries operating from the region, which is quite a good sign for the entire industry and aluminum extrusion market as well.

The aluminum extrusion market share is segmented by product and end-use. Segmentation by product includes Mill-Finished, Anodized and Powder Coated. The mill-finished products have the major market share with revenue generation of USD 50,600 million in 2021 and reach USD 82628 million by 2030 at a CAGR of 6%.

The mill-finished aluminum products are the products that are extruded without any further surface treatments and are natural aluminum products in silver color. The mill-finished aluminum has a thin layer of oxidized film that can be removed easily. However, the quick oxidation process of the mill-finished surfaces forms white residue and pits on the surface.

The anodized products segment accounted for a market value of USD 25,365 million in 2021 and reached a valuation of USD 47,822 million in 2030 at a CAGR of 7%. Anodizing is an electro-chemical process that includes immersing the extruded product in an acid electrolyte bath with an electric current allowed to pass through it. Anodizing enhances the natural oxide surface layer that increases the durability of the extruded product, and the layer formed by anodizing is hard and corrosion-resistant.

The powder-coated segment has a substantial market value which stood at USD 10, 572 million in 2021 and is expected to reach USD 16,260 million by 2030 at a CAGR of 5%. While powder coating the extruded product, the aluminum surface is pre-treated, then the specialized powder is applied over it to heat it further, and at last, the product is left to cool down. This process allows a greater strength to the extruded aluminum product and increases its durability with minimal chances of defects.

By end-user, the global aluminum extrusion market is classified into building and constructions, automotive & transportation, and electrical and electronics. The building and construction segment is the dominant segment, with USD 52,155 million in 2021 and estimated to reach USD 85,167 million in 2030 at a CAGR of 6%. Aluminum extrusion is widely used in building and construction sectors due to its low weight and high strength-to-weight ratio. Aluminum weighs about one-third of the total weight of copper or steel. Due to the high strength and weight ratio, aluminum extruded products are widely used in building structure foundations.

The automotive and transportation segment is the second most dominant segment in the said category that accounting for USD 10,818 million in 2021 and is expected to reach USD 20056 million by 2030 at a CAGR of 7%. The aluminum extruded products find their application in automotive and transportation needs as the demand for lightweight automotive components increases. With this, the transportation structures also have a huge demand for lightweight structures for bridges, highways, rails, etc.

The third category of the said segment, which is electrical and electronics, has a substantial market value recorded at USD 9,167 million in 2021 and is growing to USD 16,572 million in 2030 at a CAGR of 7%. Electrical and electronics manufacturing units use small parts used in any electronic devices, which are extruded from aluminum. That is why the said market also has a footprint in the electrical and electronics industry.

Indian Aluminium & Aluminium Extrusion Market Outlook

The India aluminum extrusion market size reached 982,980.4 Tons in 2022. Looking forward, IMARC Group expects the market to reach 1,288,202.3 Tons by 2028, exhibiting a growth rate (CAGR) of 4.49% during 2023-2028.

Aluminium extrusion is a widely adopted manufacturing process that entails the transformation of aluminium alloy into specific cross-sectional profiles. The procedure involves the utilization of a cylindrical billet of aluminium, which is heated to a pliable state and then forced through a shaped die by a hydraulic press or ram.

The result is a uniform, elongated piece with the same profile as the die, commonly used in the production of structural components, window frames, and various industrial applications. Aluminiums lightweight nature, coupled with its remarkable strength and resistance to corrosion, makes it an ideal material for extrusion. The efficiency of this process has led to its broad utilization in multiple sectors, including automotive, construction, electronics, and transportation, representing a critical facet of modern industrial manufacturing.

The Indian Aluminium Extrusion market is witnessing substantial growth, buoyed by the expanding construction industry in India, with its rising demand for lightweight and energy-efficient materials. Additionally, the automotive sectors increasing reliance on lightweight and corrosion-resistant components has fostered the markets expansion. Along with this, the governments push towards infrastructure development and sustainable practices further stimulates growth, aligning with global environmental concerns. In addition, advancements in extrusion technology, enabling more intricate and customized shapes, have unlocked new applications and opportunities within the Indian market.

Apart from this, the trend towards the utilization of recycled aluminium, reflecting the global shift towards sustainability, has also positively impacted the market. This, together with the anticipated growth in the electronics and transportation sectors is creating a positive market outlook. Some of the other factors driving the market include rapid industrialization and changing consumer preferences.

OPPORTUNITIES AND THREATS

We are constantly on the lookout for opportunities that knock on our doors, while keeping tab on the likely threats to our business.

Opportunities-

Penetration of motor vehicles in developing economies andgrowing industrialization in emerging economies provide wideropportunities for the growth of the Aluminium sector.

Threats-

Competition from low cost manufacturers is likely to continue.

COMPANY OVERVIEW AND GROWTH STRATEGY

Improved service, prompt response and wider reach to dealers, distributors and the satisfaction of customers have been our continued endeavour for business development.

Success Drivers

Our Legacy: With an experience spanning a rich 33 years, our Company enjoys a number of first mover advantages comprising a comprehensive understanding of the aluminium and aluminium extrusions market, reputed brand and a strong customer base.

Integration: We possess in-house facilities for -

- Melting, casting and homogenization of billets,

- Extrusions manufacturing with three press lines

- Die manufacturing,

- Manufacturing various value added products of extrusions for engineering applications, and

- Manufacturing Power Transmission & Distribution Hardware

With 3 extrusion press lines, the Company has a capacity to produce 15000MT of Aluminium Extrusions, which as per the information available with the Company.

Die Library: The Company possesses an inventory of more than 5000 dies to manufacture over 3500 profiles. The Company maintains back-up dies for meeting the requirements of fast moving profiles.

Availability of raw material: The Company accesses raw material (aluminium ingots and billets) from two renowned and proximate primary metal manufacturers- Vedanta Aluminium, and NALCO, The Company is one of Indias largest institutional aluminium ingots/billets consumers with corresponding purchase economies.

Quality assurance: The Companys manufacturing facility is accredited with the prestigious ISO-

9001:2015 certification endorsing its strong quality systems. Our Company continues to emphasize on maintaining the utmost quality and safety standards in its factory. Our Company is AS9100D (technically equivalent to EN 9100:2018 and JISQ9100:2016) also ISO 14001:2015 and ISO 45001:2018 certified.

The Company supplies extrusions as per tolerances laid down by the Bureau of Indian Standards in accordance with BIS: 2673-1979, BIS: 3965-1981 and BIS: 6477-1983, and with even stringent tolerances as per customer needs based on mutual agreement.

The sharp focus on Quality in all its initiatives has enabled our Company to launch some specific value- added services

Product applications: We manufacture extruded products for varied applications, viz.:

- Profiles for Architectural Applications such as Building Systems, Structural Glazing, Curtain Walls, Aluminium Rolling Shutters, Windows, Doors, Partitions, False Ceilings, Tower Bolts, Hand Rails, Door Handles, Hinges, Drapery Rods, Modular Furniture, etc.

- Profiles for Aluminium Form work

- Profiles for Road Transport Sections

- Profiles for Rail Coach Windows & Doors

- Profiles for manufacture of Automobile Components

- Profiles for Heat Transfer in Electronics & Electrical Gadgets

- Profiles for Electrical applications such as Tubes and Flats for Bus Bars, Transmission Line Hardware such as P.G. Clamps, H-Connectors, Repair Sleeves, Lugs, Solar Panels etc.

- Profiles for Engineering Applications such as Motor Housings, Gear Pump Casings, Ferrules, A.C.Louvres, Machinery Parts, Elevators, Pneumatic Actuators, Pneumatic Cylinders, Valve Bodies, etc.

- Profiles for various Defence Applications and many more.

The Company also has necessary set up to supply extruded & cold drawn round bars and hexagonal bars in straight lengths for various engineering applications. It also has a set up to supply extruded & cold drawn rods/wires in coil form to be used as armour rods, lamp pin stock, metallizing wire, rivet stock,

welding filler wire (MIG & TIG), etc.

Customer profile: The Company possesses a portfolio of over 500 reputed customers. The Company has retained most of the customers over a period of 33 years.

Our Company has an installed capacity to produce 15000 MT of extrusions per annum. As against this, our production for the financial year2023-24 was 13,674 MT. We have a significant spare capacity to increase production and sales volume.

Our Company is planning to minimise the gap of installed capacity and actual production during the financial year 2023-24.

The segment-wise expected demand growth is given hereafter:

1. Automotive Sector- Aluminum offers the fastest, safest, most environmentally friendly and value- added way to decrease mass and increase vehicle performance, boost fuel efficiency, extend battery range and reduce emissions. Aluminum builds a better vehicle...period. As the industry readies for a wave of electrified powertrains and battery electric vehicle platforms, aluminum is the preferred choice of many automakers thanks to its ability to reduce vehicle weight—extending vehicle range and countering heavy components like EV batteries. The most innovative vehicles of today and tomorrow are designed with aluminium.

2. Power Sector - Power and infrastructure sectors in India are witnessing and would continue to witness strong growth in the coming years with the boost from policy measures and budgetary allocations. Our country faces continuing power shortage. More investments to plug the gap means more aluminium extrusions.

3. Engineering Applications- Aluminium Extrusions are increasingly being used to manufacture forged and forged & machined components for use as parts of machinery, fasteners, rivets, wire rope ferrules, motor housings for domestic pumps, hydraulic gear pump casings, heat sinks, ladders, elevators, etc.

4. The Sustained Agriculture Emphasis in our Country - More investments in irrigation mean more aluminium extrusions.

5. Solar Energy Industry is an emerging opportunity, which implies significant consumption opportunities for aluminium extrusions from solar panels over the years to come. Century Extrusions Ltd.

6. Indian Defence Sector: Aluminium extrusions are consumed in a wide range of applications in this sector, comprising tail-end fuse connectors for detonator shells and grenades, frame-work for tents and as a roll-over ‘mattress for tanks to navigate difficult terrains. Given the significant supply deficits, high growth potential and conducive government policies, a large opportunity.

Power T & D Hardware

India today stands at the threshold of being an economic superpower. Power is one of the key requirements to support and sustain our economic growth. Power is a key ingredient in driving growth in manufacturing & services. Aluminium finds growing use in this space as it is directly used in the overhead transmission and distribution lines.

Power Transmission and Distribution Hardware Fittings are required for use on Overhead Transmission and Distribution Lines for connecting Insulators with Tower/Pole Cross Arms and Insulators with conductors.

The Company has manufacturing facilities for casting of Aluminium Alloys, manufacturing of Extruded products in Aluminium & its Alloys, Wire Drawing, Helical Products, Fabrication of Ferrous & NonFerrous Components, Argon Welding, Electric Arc Welding, Machining, Bundle Spacer Assembly, Vibration Damper Assembly, Conductor Accessories, Clamp Connectors for Hardware Assembly, and manufacturing of Tools, Dies & Moulds. Aluminium is also used in insulated and underground cables laid in large populated urban areas and in reserved forests (to avoid deforestation), Round Tubes are used for corona control rings, grading rings, mid-span compression joints, dead-end clamps and jointing sleeves, among others, signifying huge opportunities for extrusions in the power sector.

The Company has successfully registered itself as a supplier of its products with a number of State Electricity Boards during the year and the process is continuing. The process will get further momentum as company achieves requirements of minimum years of supply track record and experience, with each passing year. The Company has received substantial orders from the said State Electricity Boards, Transmission and Distribution Line State based utilities and Erection Contractors.