Long-term demand for downstream aluminium is looking positive.

- Pragun Khaitan

Vice-Chairman and Managing Director, Jindal Aluminium

Indian economy is going through rough seas since the past couple of years due to various reasons. The last two years have been like a rollercoaster ride, thanks to the Covid pandemic. Are we already seeing some green shoots? How optimistic are you about the USD 5 trillion growth target? Tell us about the overall view on the construction and infrastructure sectors.

The post-pandemic sign of recovery or green shoots in the Indian economy is visible now. If one is to look at economic indicators, then an upturn is starting to show. There are various reasons for this, including demand revival, meeting vaccination targets, government & industry initiatives. While there is cheer, the road to recovery is slow, and there is still some distance to cover before turning the corner. As far as the USD 5 trillion growth target is concerned, I think India can achieve the PM's vision for the country. FDI has been promising. There has been an inflow of USD 22.53 billion from April to June 2021 that is 90 percent higher than USD 11.84 billion in the same period the previous year. It tells us that global confidence and investment are improving.

About the construction and infrastructure sectors, the macro-indicators reveal a positive growth for both sectors. These two critical areas are fundamental to initiating economic recovery measures for developing nations like ours. It is also a crucial driver in achieving sustainable economic growth.

The government had announced the ambitious Rs 20 lakh crore package amid the peak of the pandemic last year. It's already been a year now; did you see any positive impact of its implementation and to what extent? In the meantime, the government has also announced Rs 100 trillion infra plan. How do you see these developments fuelling the growth engine? Which sectors (for e.g., power, aviation, railways, etc) are likely to drive the growth for the aluminium industry?

The package has helped the MSME sector in dealing with the equity problem at hand. Any stimulus of this nature impacts the industry significantly. As a part of India Inc, I look at it as the need of the hour but as an incentive that will go a long way in overcoming challenges that the pandemic posed. If you ask me about one impact, it has helped everyone better prepare for a third Covid wave. The Gati Shakti Scheme announced by the government recently has the potential of being the key to India's robust growth engine. This Rs 100 lakh crore infra plan will help in devising holistic infrastructure growth. To answer your question on sectors that we expect will drive the growth for aluminium downstream, there are construction, power, defense, aviation, aerospace, and the mobility space with electric vehicles and related infrastructure is very promising. The penetration of aluminium as a metal is phenomenal across all sectors.

What are the challenges faced by the sector players? What are the measures that need to be taken to address the challenges? Also, how has the pandemic impacted the sector and how did the industry deal with it. How have you turned this pandemic into an opportunity instead of a challenge for your company?

The growing dumping of aluminium downstream products in the domestic market from China, Indonesia, Malaysia, and other countries has undesirably impacted the domestic operation of these products. Our (India's) import duty levied on downstream aluminium products is 7.5 percent, against 20 to 30 percent in Southeast Asian nations, which also have free trade agreements (FTAs) with India. With export incentives (available in their country), Chinese manufacturers are dumping downstream products in India at a throwaway price. It challenges the local MSME downstream manufacturers who find it difficult to safeguard themselves from the onslaught of this foreign aluminium dumping. It is important to note that this is not the case with primary aluminium, which sees little dumping from China. China has an export duty in place for its primary aluminium to incentivize value addition to the aluminium in their country.

Necessary government measures are required to ensure that the customs duty should be lower at the raw material stage and should increase as you go up the value chain. It will help increase value addition within the country by consuming domestic raw materials and supporting employment generation. This approach can turn 'Make in India' and 'Atmanirbhar Bharat' into a reality. Government should also encourage "greening" of the metal by forming a national aluminium recycling entity that collects domestically consumed aluminium waste. The government should deepen the downstream aluminium industry by forming regional aluminium manufacturing and processing clusters, make dedicated aluminium research and training facilities to build a deeper talent pool and encourage grassroots entrepreneurs to plug into the aluminium industry by creating a national aluminium opportunity portal that highlights gaps in the Indian supply-chain for aluminium.

The economic slowdown is bound to happen as a reciprocal effect of the lockdown. As mentioned above, the economy has already started showing signs of recovery. Because downstream production has been relatively in line with the demand, we have looked at making ourselves more competitive by compressing our processing costs and bringing inefficiencies in manufacturing at a lower scale.

I believe that in every crisis, there is an opportunity. During the pandemic, there was a sudden increase in aluminium extrusions demand for its use in various sectors, supported by an increase in the demand for products from those sectors. This will undoubtedly help us diversify our product range further, and we will see some low-demand sectors increasing their offtake. Our value systems as good corporate citizens have stood the test of time over 50 years now, and the Covid-19 pandemic is no exception.

What are the technological advances achieved in this segment?

The extrusion process is used across multiple verticals in different industries. Aluminium extrusion is engineering the metal in the desired size, shape, length, and other properties. It produces Aluminium profiles with a constant section by forcing it through a die opening. Still today, even the most crucial design of extrusion dies is mainly based on the experience and skill of the die makers. There isn't a massive technological breakthrough in the method of manufacturing extruded or rolled products. But there has been lots of innovation in the development of new alloys meeting different industry verticals. Segments like defense, aerospace, and EVs require high precision work meeting the functional requirement. Offering top product quality to our customers is what we strive for at Jindal Aluminium. We believe in listening to our customers and deliver first-rate products with advanced equipment at our manufacturing units.

In addition, the industry is not untouched by digitalization. Over the next several months, we (Jindal Aluminium) will witness a leadership-driven initiative paving the way to implement a digital ecosystem across our business functions. For example, recently, we introduced SAP technology; earlier, we launched an order management system 'UDAY - rise with aluminium' for our dealers. The idea is to make sure that we optimize our operations, simplify processes and make data more accessible using available technologies.

What are the long-term prospects for the aluminium industry?

With infrastructure development, construction, and electric mobility, the long-term demand for downstream aluminium is looking positive. Many sectors are now reducing their carbon footprint through the usage of aluminium over plastic and other metals. We must adopt sustainable practices to ensure a green recovery from Covid-19 and tackle climate change, as we rebuild. Measures of the government to ensure that the low-duty imports of downstream products are kept in check will improve the standing of domestic players and lead to long-term benefits. Consumption of domestic raw materials and support to employment generation will also go up. With the projected 8% growth, India should be among the countries with a low carbon economy through aluminium in the next 8-10 years.

Can you also share your outlook for your company by 2025?

We are looking at a multitude of market opportunities and believe that there is massive scope for aluminium usage in the building and construction sectors. This being the significant area for us, we are focused on capacity building and innovation within this space. Furthermore, with the government's impetus on smart cities and urban development, we see tremendous potential for Jindal Aluminium to serve the needs of the burgeoning construction sector. We are working to improve our value-added offerings for this segment and hope to maintain a significant mind-space of our brand with our customers.

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