Aluminium

 

Overview

With the advent of renewable energy companies growing in numbers in the market and the increased demand for faster, lighter and fuel efficient cars, the Aluminium industry does have immense opportunities for growth in the automobile and power sector. During the past 5 years, India is the only economy among its peers to have registered a compounded annual growth rate in the consumption of the aluminium as a product. With capital expenditure investments coming in from many companies in the past few years, it is apparent that there is a growth opportunity in this industry foreseeable for the investors.

India’s consumption of aluminium has grown at a CAGR of 15% but in per capita terms is much lower than countries like US and China. Power, food packaging and automotive industries are directly correlated to the industry, thus growth in these sectors will spur growth in the Aluminium industry. Within the domestic market, there are more than 500 large and small scale producers of related products because of which there are very few large players but they govern most of the markets due to their extensive reach and brand value.

 

Outlook

With a total market Capitalisation of INR 31,201 Crore, the aluminium industry is undervalued by the market due to severe losses made by smaller companies as economies of scale form a major part of the cost efficiency that bigger companies have. Among the companies that are listed, two companies: Hindalco and NALCO govern most of the share of total sales while there are many small scale players like PG Foils, Hindustan Aluminium and Gujarat Foils which also clock a revenue of more than 250 Crores.

 

Buy Industry Analysis

 

With about 200 operational bauxite mines operating in India and only 15 major deposits are responsible for 75% of the total production, it is imperative that the industry is scattered and monopolised by large listed and non-listed companies and local demands are being met by indigenous small scale producers. Due to the advantages of captive power, cheap labour and proximity to ample supply of bauxite, the opportunities in India for companies are plentiful.

 

Future Potential

With a per Capita Consumption rate of only 1.8 kg for India, the industry will develop its own course from being one of the few top players in the international scenario to being at the top of them all. This being an industry which is responsible for 1% of the total greenhouse emissions by humans, proper care and environmental regard needs to be given by companies to ensure proper reuse and recycling of such aluminium products. The Aditya Birla group led Hindalco have set up an internal benchmark of about 80% of the production from recycled aluminium. This will also allow companies to increase margins and cost efficiency in their operations. The structure, opportunities and technical and geographical feasibility in terms of location and proximity to target markets of the plant are also important factors that need to be taken care of by the new companies for entry into the industry. With the aluminium prices which seemed to have bottomed out globally, the global market also looks for revival by intense capacity building and capital expenditure. The future of this industry depends heavily on the sustainability of the participant countries and the current debt burden in these companies will hurt their earnings in the long run.

 

What this report contains:

  • A detailed overview of the industry

  • Structure of the industry from both, domestic and international perspectives

  • Related industries that this industry has inter-dependencies with and their understanding

  • Detailed analysis of industry segments in terms of the value and depth of corresponding market

  • Analysis & insights about the elements and critical success factors of this industry using strategic models

  • A forecast on the state of this industry in 2020, predicting the growth and movement patterns for 2016 - 2020

  • Our professional analysis on the future of the industry based on strategic actions adopted by major industry participants

  • Quantitative estimates and forecasts of the growth prospects of the industry using revenue and financial forecasting models

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