With the view to uplift its copper earnings, Hindalco Industries is set to more than double the contribution of the value-added products to the red metal business in the early part of 2018.
According to J C Laddha, group executive president at Birla Copper, the copper division of Hindalco Industries the company’s copper unit expansion is underway and it will take the contribution of value-added products to 80 per cent from the low of 35 per cent at present. He was speaking on the sidelines of India Copper Forum held in the last week of December 2016.
With an investment of a little more than Rs 200 crores, the company has planned the commissioning in the first quarter of the year 2018.
Laddha further added that since premiums for value-added products are higher, the focus is on this particular segment. The company also has a separate team dedicated to look at which all value-added products can be added to the copper business so that earnings improve.
Though the company's copper business normally contributes somewhere around 25 per cent to the company's profits and 65 per cent to its revenue in select quarters last year, the business held the fort for the company since the weak aluminium prices made the situation tough for Hindalco.
The Aditya Birla Group firm has a copper smelter complex located at Dahej in Gujarat which produces copper cathodes as well as continuous cast copper rods of various sizes.
Though this expansion under discussion is expected to churn better earnings for Hindalco's copper business, analysts expect that in the overall scheme of things, the number is small for Hindalco Industries.
Meanwhile, Hindalco Industries' peer in the copper business, Vedanta, is also doubling its copper capacity at Tuticorin in Tamil Nadu and plans to take it up to 800,000 tonnes and has already received environmental clearance from the authorities.
P Ramnath the chief executive officer at Sterlite Copper said that their expansion will cater to the overseas market as domestically the demand is getting eaten up by imports.
Currently, Vedanta India is the second-largest copper producer in the country after Hindalco Industries. India imports about 97 per cent of the copper concentrate to produce finished products. With the rising imports of finished copper products, the domestic industry has recently urged the government to remove the 2.5 per cent import duty on copper concentrate.
Hindalco share price was seen trading at Rs 171.65, down by 2.53 per cent at 3.10 PM on NSE.
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