23rd February

Pressure on wonder metal

The article talks about the building pressure on the aluminum major, Hindalco, to find growth opportunities in the merging markets, especially India, since the sales of developed markets like Europe and US have dried up.

The fifth largest aluminum major reported a quarterly loss of $1.8b in December. $1.5b of this was goodwill loss due to higher cost of funds and $472m mark-to-market loss in derivatives. Due to this Novelis, reportedly, plans to reduce output by 13-15%. More then half of Novelis’ $11.2b revenues comes from can products which is also showing revamp. However, the major growth areas for the company would be automotive, transport, building and construction domain where there is a rise in use of aluminum due to its high strength-to-weight ratio, corrosion resistance and malleability. Although good opportunities in US and Europe, the real market is in Asia which presently account about third of its US and Europe market size. Now, it’s up to Hindalco how it manages growth in these markets. 

It may not have to go that far since the growth opportunities are right here in India. Presently aluminum is used negligibly in wagons and cars in India. If used in trains, it could significantly improve the productivity of rails while for cars it could reduce the weight considerably and thus increasing the fuel efficiency considerably. Thus, while the main markets contracts, Hindalco needs to find new growth opportunities in emerging markets like India and China.

The other Satyams

The article commends government and SEBI over its agility to act in Satyam’s case and its efforts to bring the company back to track. At the same time the author talks about other such fraud cases that are pending before judiciary and seeking justice. There is also lethargy on the part of government on other legal and administrative reforms that need to be implemented as soon as possible.

While pleasantly agile in Satyam’s case, the government and SEBI has proved that, when needed, they can cut through the red tape and speed up the process. However, there are several such cases pending in courts that deal with frauds, mismanagement, bankruptcy, violations of trade practices and oppression of minority shareholders. Such cases need to be solved as soon as possible in order to allocate productive assets to profitable activities. Besides that there is Competition Commission of India which is yet to get its chairman and members and also National Company Law Tribunal (NCLT) which is yet to be formed. While Competition Commission of India was to replace Monopolies and Restrictive Trade Practices Commission, NCLT was to include Company Law Board, the Board for Industrial and Financial Reconstruction and jurisdictions of high courts over M&A. 

The case challenging NCLT is now with SC and CJI has assured a rapid hearing. The current govt cannot complete these tasks presently but the new govt should pursue the completion rigorously.

Nuanced sloganeering

The article tries to project reality that is being overlooked in the euphoria created by the slogan “J-A-I-H-O”.

The slogan hits the recession-hit world to create an illusionary euphoria among the masses, especially Indians who get elated too often on every single reason. While talking about the scene in the movie where Dev Patel and Frieda Pinto jive at CST, the author tries to fit various problems India is facing currently into the scene. Terrorist Kasab, with his gun, running behind Frieda instead of the villain; or malnourished children instead of Kasab; or parched land instead of kids or a pink-slipped guy instead of parched land and “Jai Ho” becomes meaningless, annoying and disrespectful. The song has a great impression on nation’s conscience but it does not fit anywhere in the current Indian scenario.

However, since the movie is running the final race in the Oscars, we keep our qualms aside and sing “Jai Ho!!!”