Hindalco rights issue: with long-term promise

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: Hindalco Industries Limited is one of the county’s largest aluminum and copper producers. Being a part of the Aditya Birla Group, this company has made its mark in the world. It has been positioned as the sixth largest aluminum producer in Asia and the eleventh largest in the world, based on volumes of calendar year 2007. On May 15, 2007, Hindalco acquired Novelis Inc, which is the world’s largest aluminum rolled products producer. With this acquisition, Hindalco has achieved economies of sale, an increased global reach and also gotten access to advanced technology. The company also owns and operates one of the largest single location copper smelters in the world at Dahej. They receive a portion of their copper from Australia where they own mines and also purchase copper concentrate at the London Metal Exchange (LME). In 2007, Hindalco was also among the top 10 copper producers in the world by capacity.

While Hindalco itself has a very good stand and has proven its stability, post Novelis acquisition, the company’s share price has seen some fluctuations. However, if one is to look at the basics of Novelis, the value addition this purchase has given the company should hold them in good stead. Novelis is the largest aluminum product producer in the Europe, South America and Asia and are also the world leaders in recycling used aluminum beverage cans. They have recycled approximately 36 billion used cans in the last financial year. Having operations in 11 countries, they produce aluminum sheets and foil products for customers in the automotive, transportation, packaging, construction and prinking industries. Their key customers include, Anheuser-Busch Companies, affiliated to the Ball Corporation, Crown Cork & Steel Company and Rexam Plc. This not only has given the company a very good triple bottom line in recent years but also shows how beneficial this strategic acquisition can prove to be.

Bridging the gap