Indal

Worst affected by this cut is Indian Aluminium (Indal) which is entirely dependent on the state grid for its operations.

Indal was forced to shut down its extrusion unit at Alupuram. This unit accounts for around 10 per cent of its total turnover.

Revival of this unit is now entirely dependent on the outcome of the monsoon. Early filling of reservoirs should enthuse the government into restoring power supplies.

The severe power crunch has already rendered Indal's 40,000 tonne per annum smelting capacity at Belgaum, Karnataka idle. Despite having metal capacity of 1.17 lakh tonne per annum, Indal is currently sourcing 35 per cent of its metal requirement from outside. The same has exposed Indal to the vagaries of international price trends.

 

Indal is in for some serious trouble on this front. Aluminium prices have firmed up significantly on the London Metal Exchange. Price of aluminium has moved up from $1250-1300 per tonne in the first half of 1995-96 to the current level of $ 1600 per tonne.

It is expected to further firm up to $ 1700 per tonne. Coupled with this, the union budget 1997-98 has revised the import duty on aluminium from 10 per cent to 20 per cent. This is expected to make the price of aluminium costlier by a further Rs 5,000-6,000 per tonne.

In the year ended March 97, Indal's turnover came down by 2.5 per cent while its expenditure rose by 5 per cent on account of hike in input (coal, petrol and power) costs. The result was a dip in net profit by 48 per cent. To tackle the power crunch that continuously plagues its operations, Indal has relocated 44 pots from its Belgaum unit to Hirakud, Orissa. Current smelting capacity of 30,0000 tonne per annum at Hirakud has the backup from its 67.5 mw captive power unit. This move will offer it some relief.

However, in the long run, its problems will be solved only by giving proper back ups to its units at Alupuram and Belgaum which are at the mercy of the state grid.

Indal has entered into an MoU with the US-based Coastal Power Company to set up a 100 mw naphtha-based captive power plant. This captive unit will activate the 40,000 tonne per annum smelting capacity at Belgaum.

However, this involves a long gestation period. The power plant will begin production only in FY99, and, till then, its fortune will be decided by external factors.