Novelis gets new fizz as Coke drops litigation

In a major breakthrough, Novelis Inc, part of Hindalco Industries, has renewed its can-body sales agreement with Coca-Cola Bottlers' Sales & Services Company (CCBSS). The two companies also agreed to dismiss all pending litigation relating to the previous contractual terms.

CCBSS purchases aluminum can sheet for all of Coca-Cola’s North American operations.

A Novelis statement said the two companies had signed a multi-year agreement for the supply of aluminium can sheet. “The agreement covers the supply of aluminum can body stock, can end stock and can tab stock to the various producers of beverage cans for Coca-Cola in North America,” it said, without disclosing the terms.

The contract continues a decades-long relationship between the two and maintains Novelis' role as the primary supplier of aluminum can sheet to Coca-Cola in North America. In 2007, a group of bottlers led by CCBSS filed a case against Novelis in Georgia, alleging breach of contractual terms. It is this case the two companies have decided to forgo and start the partnership afresh. The can contracts, which forced Novelis to sell at prices below its raw material costs to players like Coca-Cola, had cast a shadow on Novelis' profitability for long and was also responsible for its $2-billion loss in 2008.

Coca Cola and North America are most important companies and markets for Novelis. The company is the world's largest aluminium flat rolled products (FRP) maker, with a 17 per cent market share.

Each year, around 280 billion beverage cans are made and of that, 90-plus per cent are from recycled aluminium. Novelis yearly recycles close to 40 billion cans.

Details of Novelis' exposure to Coca-Cola could not be verified but the latter is Novelis' biggest client in North America.

In 2010-11, total FRP shipments of Novelis were three million tonnes, 58 per cent of which, or 1.7 mt, was towards the can market and 1.1 mt of which were to the North American market, primarily Coke. In the same year, Novelis clocked total sales of $3.9 billion of a total of $10.6 billion.

Maheshwari now Hindalco CFO

Sunirmal Talukdar has retired as group executive president and chief financial officer of Hindalco Industries. Praveen Maheshwari, who was executive director (finance) at Bharat Forge, part of the Kalyani Group, has taken over from him, said Aditya Birla Group officials.

Maheshwari is a chartered accountant with an MBA from IIM-Ahmedabad. He was with the Kalyani Group for nearly three decades. Talukdar, ACA, joined Hindalco on October 1, 1986 and retired this December 31.