Just a month after scooping up the Hyderabad-based Trinethra retail chain, the Aditya Birla group has done it again with its proposal to make the second largest overseas acquisition by an Indian firm.
In the process, Hindalco would enter the Fortune 500 league three years ahead of its internal target.
Overseas operations already account for nearly 30 per cent of the group's revenue now and the Novelis acquisition would go a long way in fulfilling group chairman Kumar Mangalam Birla's ambition of increasing it to 40 per cent in just three years.
The group would now have operations in 14 countries - the US, UK, Thailand, Malaysia, Laos, Indonesia, Philippines, Egypt, Canada, Australia, China, Germany, Hungary and Portugal.
The latest mega acquisition also means that the group would become the world's largest player in the downstream aluminium business involving value-added products.
That's just another feather in the Aditya Birla Group's cap. It already is the world's largest in viscose staple fibre, fourth largest in insulators and carbon black, eleventh largest in cement and among the top 15 in business process outsourcing. Hindaco, India's biggest aluminium producer was so far the fourth largest aluminium producer in Asia and had the largest single location custom copper smelter.
While the group's overseas acquisitions have been many, analysts say Hindalco's latest global buy has been prompted by the fact that leading aluminium companies in the world like Alcan and Alcoa have been through a furious consolidation spree through acquisitions of smaller players across Europe and the US. The 10 top players control more than 50 per cent of the market. In the process, greater scale has helped bring down the cost of production.
In order to increase the scale, Hindalco has also set a scorching pace in domestic capacity expansion and setting up of greenfield projects. Consider the following:
- The expansion of the alumina refinery at Muri in Jharkhand, from 110,000 metric tones per annum (tpa) to 450,000 metric tpa is at an advanced stage
- The Hirakud expansion is in two phases. Phase One, which entails ramping up of the smelter from 65,000 tpa to 100,000 tpa and the power capacity from 167.5 mw to 267.5 mw, is on schedule. The second phase where a further ramping up of the smelting capacity from 100,000 tpa to 146,000 tpa is also in line.
- The company also plans to expand the alumina refining capacity at Belgaum from 350,000 tpa to 650,000 tpa.
- Utkal Alumina in Orissa plans to set up a 1.5 million tpa greenfield alumina refinery.
- Considerable progress has also been made in Hindalco's greenfield Aditya Aluminium project, which is an integrated 1.5 million tpa alumina refining and 325,000 tpa aluminium smelting project in Orissa.
- Hindalco has also entered into an MoU with the Madhya Pradesh government for a greenfield venture to build a 325,000 tpa aluminium smelter along with a 750 mw power plant.
- The company has also signed another MoU with the Jharkhand government for a 325,000 tpa aluminium smelter and a 750 mw power plant in the state.
- Analysts say the acquisition makes huge sense for Birla as globally, aluminium demand is slated to grow at 5 per cent this year. The robust growth in the Asian region, led by China, would continue to drive the demand for metals. In fact, there has been a 21 per cent increase in aluminium consumption in China. A significant demand is forecasted from the East European countries.
Birla's global footprint
2006:- Grasim, Thai Rayon Public Company and PT Indo Bharat Rayon of Indonesia form a JV with Hubei Jing Wei Chemical Fibre Company, China, for VSF.
2005:- The group signs a framework agreement to acquire St Anne Nackawic Pulp Mill, Canada
2003:- The group acquires the Mount Gordon Copper mines in Australia, another strategic step in becoming a globally competitive copper player.
Liaoning Birla Carbon, the group's first carbon black company in China, is incorporated
Birla Copper acquires the Nifty Copper Mines in Australia, to make the company an integrated copper producer, and source raw material for its copper smelter at Dahej, Gujarat.
1994:- Alexandria Carbon Black, the group's first joint venture with the Egyptian government, is established
1992:- Thai Epoxy and Allied Products commences production of Epoxy Resins in Thailand
1991:- Pan Century Oleochemicals commences production of fatty acids and glycerine in Malaysia. Thai Peroxide commences manufacturing of hygrogen peroxide solutions in Thailand
1987:- Thai Acrylic Fibre is incorporated to produce fibre and tow.
1984:- Thai Polyphosphates and Chemicals commences production of sodium phosphates in Thailand PT. Indo-Bharat Rayon is established. It is the first producer of Viscose Staple Fibre in Indonesia
1978:- Thai Carbon Black, the group's first carbon black company, is incorporated in Thailand
1977:- Pan Century Edible Oils is incorporated in Malaysia, going on to become the world's largest single-location palm oil refinery
1975:- The Indo Phil Group of Companies, the first Indo-Filipino joint venture, commences production of spun yarn.
1974:- Thai Rayon, the group's Viscose Rayon Staple Fibre business, is incorporated in Thailand
1973:- Elegant Textiles is established to manufacture spun yarn. It marks the group's first venture in Indonesia
1969:- Aditya Birla sets up Indo-Thai Synthetics Company, the group's first overseas company
