ET reported that cans for beverage majors such as Pepsi and Coke will soon be made in India. Hindalco Industries which acquired Novelis in 2007 will make the high margin can sheets for global buyers at its upcoming facility in Hirakud of Orissa through a plant relocated from Novelis' UK unit.
The move which will meet Hindalco's main reason for acquiring Novelis in 2007 is expected to boost the Birla Group flagship's profitability due to the premium pricing that such can sheets command.
The thin aluminum sheets which are used in packaging of beverage products accounted for 50% to 55% of Novelis annual shipments last year and are priced 30% to 40% above base grade aluminum products.
The technology to make such sheets is limited to the top global 4 aluminum producers with Novelis leading the bracket. Hindalco which was essentially seen as a commodities company paid USD 6 billion to acquire Novelis to gain the technology and extend its markets.
Mr Debu Bhattacharya MD of Hindalco said that "This is part of the premium portfolio we want to grow. We follow a global marketing strategy and the target mark up and profitability of our Hirakud facility is expected to be in line with Novelis' premium portfolio margins.”
He said that Hindalco will primarily target export markets for supplying can body stock a high value added aluminum product from the new factory at Hirakud. To be commissioned in October 2011, Hindalco is shifting key equipment from Novelis' plant at Rogerstone of UK.
Mr Bhattacharya who is also the vice chairman of Novelis said that this is for the first time that can body stock will be manufactured in India. We will mainly try to export the product and supply to Canpack, a leading multinational producer of cans, which has a large factory at Aurangabad.
Poland based Canpack is one of the largest producers of aluminum based packaging material for beer, beverages, food and chemical industry and has 650 million can facility at Aurangabad.
Hindalco's acquisition of Novelis for USD 6 billion in 2007 was widely criticized as expensive by analysts and investors who also saw little option for Novelis to shift its technology to India. But a falling market share in Europe and strong demand patterns in Asia have made can sheet manufacturing in India more feasible.
Mr Bhattacharya said that Hindalco, while there are technology and asset transfer regulations involved in such a move we have complied in letter and spirit. Our Hirakud plant is expected to be up and running by October this year. Following this, we would have to qualify for supplying the product. Once we qualify we will start supplying from Hirakud.
He said that the project will also enable Hindalco to manufacture can body stock for the domestic market. To start with, Hindalco is setting up an initial capacity of 140,000 tonnes of can body stock and will later expand it to 500,000 tonnes.
（Sourced from Reuters）
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