Pai’s Innovation Adds Shine To Hindalco

SATISH PAI, managing director, Hindalco Industries, wanted to be a writer and a musician as a school kid. But he ended up as a business leader, writing the success story for Hindalco. From tough times of Covid, Pai has made Hindalco a global pioneer in ESG, a resourceful innovator churning out futuristic products and an entity that runs like a well-oiled machinery. Pai has nurtured Hindalco much like the title of his favourite business book, Good to Great.

Hindalco makes aluminium, copper and speciality alumina across 10 countries and 52 units. It owns four Bauxite mines — two in Jharkhand (Netrahat and Lohardaga) and one each in Chhattisgarh (Samli) and Odisha (Baphlimali). It also owns one coal mine in Chhattisgarh (Gare Palma) and two in Jharkhand (Chakla and Kathautia). It has four refineries and four smelters.

Growth Drivers

India’s per capita aluminium consumption is 3.1 kg compared to the global average of 12.2 kg. Per capita copper consumption is 0.7 kg as against the global average of 3.9 kg. In China, per capita aluminium consumption is 34.9 kg, while copper is at 11.8 kg. The numbers indicate a lot of room for growth in India. India’s urban population, projected to reach 600 million by 2036, from 416 million in 2018, is also expected to drive demand in building/construction, infrastructure and consumer goods sectors that are big users of aluminium, copper and specialty alumina products. For instance, India’s goal to increase non-fossil fuel capacity to 500 GW by 2030, with focus on solar PV systems, is expected to boost demand for aluminium and copper, key inputs in solar modules.

Electrification of automotive industry is also pushing demand as electric vehicles require three-four times more copper than traditional internal combustion engines. Global demand for aluminium rolled products also remains strong, driven by economic growth, material substitution and sustainability considerations, including awareness about environmental impact of PET plastics. To support demand for aluminium beverage packaging sheet in North America, Novelis broke ground on a 600 KT greenfield rolling and recycling plant in Bay Minette, Alabama, in October 2022. There is also an increase in demand for aluminium in electric vehicles as its lighter weight can extend battery life.

Envisioning Growth

The company plans to continue deploying profits for value-enhancing growth. As downstream business expansion near completion, it plans to shift focus to scaling up upstream business to meet the growing demand for aluminium and copper. This includes a greenfield alumina refinery in Rayagada, Odisha, whose first phase of 8,50,000 tonnes is expected to be commissioned in FY27. It is also evaluating around 2,00,000 tonne brownfield expansion at Aditya aluminium smelter in Odisha. Expansions across India business and Novelis will entail an investment of $10 billion for ongoing projects as well as ones envisioned in the near term.

Success Mantra

Hindalco’s secret sauce has been end-to-end control of the manufacturing value chain. From boosting cost-effectiveness of captive bauxite mine and coal mines to round-the-clock smelters working on renewable energy backed by pumped hydro-storage to focusing on recycling and maximising scrap inputs, the company has been working overtime to optimise its potential. Fully integrated value chain, huge scale, inflation resilient products and long-term contracts cushion it from headwinds.

While Hindalco is focusing on improving efficiency of its back-end value-chain, the front-end is innovating for high-growth sectors such as auto, packaging, building and construction and personal mobility. For instance, the company is setting up a battery foil manufacturing facility in Odisha to tap the EV market and has set up an automated robotics facility in Chakan, Pune, to make aluminium battery enclosures. The copper business is focusing on value-added products for the India market. This includes building the largest copper inner groove tube facility at Wagodia to reduce imports of this key air-conditioner component. The company has also developed a copper-silver alloy for high-speed urban transportation in India. Additionally, it is setting up India’s first copper e-waste recycling facility in Gujarat. In FY24, Novelis recycled 2.3 million tonnes aluminium scrap, amounting to 63% material used in production, and is serving beverage can and automotive markets with initial estimated capacity of six lakh tonnes.

Futuristic Transformation

In order to become future-ready, Hindalco is working on its digital capabilities and ESG transformation. ESG goals include targeted initiatives for net zero, zero waste to landfill, no net‑loss to biodiversity and water positivity. Hindalco has been receiving the highest ESG score in the aluminium sector in the S&P Global Corporate Sustainability Assessment since 2020.

Strengthening digital infrastructure has been the key to boosting profitability. The company’s digital initiatives are leveraging data for energy optimisation, and its advanced analytics models are enhancing plant reliability. Digital technology has also improved customer responsiveness with quicker on-time deliveries.

In ESG, Hindalco uses green energy in primary smelting and is a global pioneer in the aluminium industry in utilising 100 MW of round-the-clock (RTC) solar and wind power with storage. This project earned the company the ‘Energy Transition Changemaker’ award at COP28. By 2030, the company aims to meet at least 30% of its energy requirement through renewables by increasing its RTC capacity.