MUMBAI: Hindalco Industries Ltd (Hindalco), India’s second-largest aluminum producer, is seeking to quadruple exports of the lightweight metal to exploit the rupee’s plunge to a record, said two people familiar with the strategy.
Billionaire Kumar Mangalam Birla’s company expects to increase overseas shipments to an unprecedented 130,000 metric tonnes in the year through March, the people said, asking not to be identified as they aren’t authorized to speak on the subject.
Output may rise 34 per cent to 725,000 tonnes in the period after the Mumbai-based company started a smelter in central India last quarter, they said.
The rupee’s 9.8 per cent slide this fiscal year against the dollar is prompting Hindalco to accelerate capacity addition plans and benefit from rising demand for the metal used to make products from beverage cans to aircraft.
Global consumption may rise seven per cent this year, led by China, according to Alcoa Inc (AA), the world’s largest producer, with a US$250 a tonne spot premium over three-month London Metal Exchange contracts signaling demand exceeding supply.
“The rupee’s fall is prompting companies to seek buyers outside India,” Fitch Ratings Director Devendra Pant said in a phone interview from New Delhi.
“The extent of benefit they can derive will depend on global demand for that product.”
The stock has declined 23 per cent this year, compared with a 0.1 per cent gain in the benchmark S&P BSE Sensex.
Hindalco spokeswoman Pragnya Ram did not respond to an e-mail seeking comment.
First-quarter profit may fall 19 per cent to 3.46 billion rupees (US$58 million) from a year earlier, according to the median of eight analyst estimates compiled by Bloomberg. That would be the lowest in three and a half years. Sales may drop to the lowest in a year.
Hindalco, which added 359,000 tonnes of smelting capacity at Mahan in Madhya Pradesh state, is ramping up output, while scouting for buyers in traditional markets including South Korea and Japan, Asia’s biggest aluminum importer.
A US$250 spot market premium suggests demand is strong and production will rise this fiscal year, managing director Debnarayan Bhattacharya had said on May 28, without giving details. — Bloomberg