Norway aluminium producer Norsk Hydro ASA has agreed to sell its Kuppam extrusion plant to Hindalco for US$33 million according to announcements by both companies earlier this week.
The firms say the deal is an asset sale that will incur no debt. The fully integrated facility in Andhra Pradesh boasts a capacity of 15 thousand metric tons per annum of aluminium extrusions and employs about 500 individuals either as in-house employees or contractors.
The Kuppam plant produces a wide range of extruded aluminium items for automotive, building, industrial, and construction applications. Hindalco says the purchase will help it expand its footprint in the burgeoning South India market. The parties expect the sale to close early next year.
Erik Fossum, SVP & Head of Precision Tubing in Hydro said in a press release that the sale is a benefit to all parties involved.
“With execution of the Business Transfer Agreement with Hindalco, we are sure that the extrusion business in Kuppam will continue its development under the new ownership. This is a good outcome for Hydro, Hindalco and the employees in Kuppam, who will continue their efforts to grow further in a new, dedicated downstream company.”
Satish Pai, Hindalco’s Managing Director, elaborated upon the firm’s reasoning for the purchase.
“The acquisition of the Kuppam plant is a strategic step to expand our presence in the upper-end of the value-added market. The plant’s specialised product portfolio will enhance our capabilities in high-end extrusions and fabricated solutions. The acquisition is the latest step in our long-term strategy to augment our downstream business. Over the past year, we have already announced a total capex of Rs.3,730 crore towards addition of downstream capacities at Silvassa and Hirakud. Our recent acquisition of the Ryker copper wire rod unit for our Copper value-added portfolio is also in line with this strategy.”
Hindalco says the plant will serve as a model for its planned aluminium extrusions plant in Silvassa in western India.