Under difficult conditions for India’s aluminum producers, Hindalco looks to diversify

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Aluminum producers in India, like their steel counterparts, are going through some trying times.

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Rising imports, which could only get worse because of the U.S.-China trade war, and an increase in the cost of production have prompted Indian aluminum producers write to the government, asking it to overcome the anomalies in the duty structure by slashing duties on critical inputs.

Import duties on critical inputs are rendering finished aluminum products uncompetitive in international markets.

Trying to grow in this kind of a market, global aluminum major Hindalco has plans to diversify its portfolio. It is actively looking at the electric car market, the logistics sector and the can business to expand.

In an interview with CNBC, Managing Director Satish Pai said the company is actively looking at the can market because of the ongoing anti-plastic movement. Demand for aluminum cans is going up, he pointed out, which meant Hindalco would be expanding its capacity in the near future.

But what has come as a slight surprise was the aluminum major’s foray into logistics, with the launch of aluminum trailers — a first in India — and lightweight aluminum transport vehicles and trailers.

The idea is to help lower the logistics cost by about 15%, according to a report by the Business Standard.

Hindalco Industries, the flagship company of Aditya Birla Group, has decided to enter the truck and trailer market and replace the existing mild-steel usage with aluminum alloy, Pai said in an interview to the Business Standard.

Currently, logistics cost in India is at about 14%, compared with the U.S. cost of about 10% and Japan’s 11%. In addition to warehousing, transportation was the other major factor contributing to logistics costs.

As a start, Hindalco will provide these aluminum trailers for group company Ultratech Cement. For building the aluminum cargo containers and transport vehicles, the company has started working jointly with fabricators across India.

Hindalco is eyeing India’s trailer production market, which is estimated to be around 20,000 units per annum and is growing at a rate of about 12% per year.

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On the electric vehicles front, Hindalco is also actively looking at building smaller electric vehicles for last-mile delivery purpose, which is a crucial component of the logistics chain.

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