Indian's First Aluminum Smelter and Extrusion Plant on the Verge of Closure

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston. Even as Indian Aluminium Company (Indal) (Kolkata, India) reports its best first quarter sales performance in the history of the company, management is left with the realization that it may have to close Alupuram. High cost of power and an indefinite strike by workers have positioned the manufacturing site on the verge of closure.

The Alupuram aluminum manufacturing site, located in the Indian's Kerala State, encompasses an aluminum smelter and an extrusion plant. The Alupuram smelter, India's first aluminum smelter, opened in 1943, remains mothballed, due to the high power tariffs imposed by the Kerala State Government. The company was compelled to de-energize the Alupuram Smelter in August 2003, when the power concession extended to the company by the government expired, and the company's decision to purchase power from PTC India Limited (New Delhi, India) reached a stalemate. The 326 employees of the smelter have been furloughed ever since.

After the mothballing of the smelter last year, Alupuram was left with only the extrusion plant. Alupuram's plant, opened in 1955, was the first aluminum extrusion plant in India. It is located in the port city of Cochin, Kerala State. The plant offers as many as 5,000 shapes and 48 alloys, and caters to the architectural, electrical, consumer durable, industrial, and defense segments. Its two extrusion presses (1,250 & 3,300 Ton) have an installed production capacity of 9,600 tons per year. The extrusion plant has its own cast house, as well as material handling, heat treatment, and finishing equipment to support the extrusion lines. Until June 30, 2004, production from the Alupuram unit was around 12% higher, at 2,435 tons (2,177 tons). On July 1, 2004, the 103 workers at the extrusion plant went on what the management is referring to as, an illegal strike. The indefinite strike stems from a dispute over wages.

With an Indian economy poised for growth and expected to sustain a steady pace of 6 - 7% growth, the demand in the automobile and consumer durable segments will boost demand for aluminum in the country. To address this issue, Indal is looking for alternative ways to increase capacity. It is also looking at ways to address its power problems, while remaining competitive. Indal recently announced it would invest over $470 million within the next three years to expand its captive power generation, smelting, and refining capacities, as well as to scale up special alumina-making capacity. There are plans for the expansion of the Hirakud aluminum smelter to 100,000 ton per year from 65,000, and for increasing the adjacent captive power plant by 100MW, to 167.5MW.

Indian Aluminium Company Limited is a subsidiary of the Aditya Birla Group. Indal was established in 1938 and operates across the value chain from bauxite mining to alumina refining, smelting, and rolling. With a nation-wide presence through its seven plants, two smelters, three mines, and one captive power station, Indal has the advantage of being in proximity to various regional markets, both within and outside the country.