The two main players, Sterlite Industries Ltd. (SIL) and Indo Gulf Industries, dominate the copper industry. A third player, Hindustan Copper - the state run entity - is expected to be put on the disinvestment block.
Prior to FY00, India was importing a significant share of its copper requirement. New smelter capacity has come on stream only in the last two years. In FY99, India produced only 35,800 MT of copper. Sterlite and Indo Gulf set up smelter capacities of 100,000 MT each and FY00 was the first full year of commercial production. These companies now plan to augment capacities to 150,000 MT by the end of FY01. Sterlite has already increased capacity to 120,000 MT through Phase - I of de-bottlenecking. On completion of Phase - II the capacity will be increased to 150,000 MT.
Copper consumption in India for FY00 was estimated to be at 290,000 MT. Domestic production was approximately pegged at 220,000 MT while the balance was through imports of 70,000 MT. In FY01, the imports are anticipated to further decline with these companies augmenting capacities and deriving gains of process efficiencies.
Indo Gulf Ind.
Demand for copper is expected to clock 330,000 MT in the current year. With the dominant players expanding capacities and reckoned to be operating at above 100% utilization, the imports are estimated to drop by half to 30,000 MT. The balance 290,000 MT is the estimated domestic production.
The demand for the non - ferrous metal, between FY00 and FY04, is expected to grow at a compounded rate (CAGR) of 11%. The key consumption industries are telecom, auto and housing. Strong growth in these industries will facilitate buoyant copper demand. These industries have potential to register robust growth rates in the coming years with penetration levels being abysmally low.
The Government has announced a slew of reforms in the telecom sector to kick-start this industry. Further, the housing sector is anticipated to grow by more than 10%. This should help sustain the growth in copper demand. However, the current year has seen a slow down in the auto sector, which may fetter the copper industry growth rates.
LEGAL DISCLAIMER: Equitymaster Agora Research Private Limited (hereinafter referred as 'Equitymaster') is an independent equity research Company. Equitymaster is not an Investment Adviser. Information herein should be regarded as a resource only and should be used at one's own risk. This is not an offer to sell or solicitation to buy any securities and Equitymaster will not be liable for any losses incurred or investment(s) made or decisions taken/or not taken based on the information provided herein. Information contained herein does not constitute investment advice or a personal recommendation or take into account the particular investment objectives, financial situations, or needs of individual subscribers. Before acting on any recommendation, subscribers should consider whether it is suitable for their particular circumstances and, if necessary, seek an independent professional advice. This is not directed for access or use by anyone in a country, especially, USA or Canada, where such use or access is unlawful or which may subject Equitymaster or its affiliates to any registration or licensing requirement. All content and information is provided on an 'As Is' basis by Equitymaster. Information herein is believed to be reliable but Equitymaster does not warrant its completeness or accuracy and expressly disclaims all warranties and conditions of any kind, whether express or implied. Equitymaster may hold shares in the company/ies discussed herein. As a condition to accessing Equitymaster content and website, you agree to our Terms and Conditions of Use, available here. The performance data quoted represents past performance and does not guarantee future results.
SEBI (Research Analysts) Regulations 2014, Registration No. INH000000537.
Equitymaster Agora Research Private Limited. 103, Regent Chambers, Above Status Restaurant, Nariman Point, Mumbai - 400 021. India. Telephone: +91-22-61434055. Fax: +91-22-22028550. Email: email@example.com. Website: www.equitymaster.com. CIN:U74999MH2007PTC175407