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Business News/ Companies / Balco to shut down rolled products business
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Balco to shut down rolled products business

The move will help eliminate further losses, cut overall manufacturing cost, restructure overheads and optimize margins at Balco

On Wednesday, shares of Vedanta fell 8.03% to `113.90 apiece on the BSE while the benchmark index Sensex fell by 1.27% to 27,512.26 points.Premium
On Wednesday, shares of Vedanta fell 8.03% to `113.90 apiece on the BSE while the benchmark index Sensex fell by 1.27% to 27,512.26 points.

Mumbai: Vedanta-controlled Bharat Aluminium Co. Ltd (Balco) has decided to shut down its rolled products business due to low aluminium prices.

“We have noted that due to the steep fall in aluminium prices globally, our said subsidiary, Balco, has decided to close down its rolled product business, which was already reeling under pressure of huge scrap imports, dumping from China and falling margins," Balco said in a statement to the exchanges on Wednesday.

The move, Vedanta Resources Plc said, will help eliminate further losses, cut overall manufacturing cost, restructure overheads and optimize margins at Balco. The closure process has begun and will be completed by the third quarter of the financial year, Vedanta said in its statement.

Rolled products are value-added products made from aluminium sheets. Balco is an integrated aluminium rolled product producer with access to bauxite mines, an aluminium smelter and rolling capacity. Being a value-add, rolled products claim a premium over standard aluminium sheets.

In the past year, the price of aluminium on the London Metal Exchange (LME), which is the global benchmark of aluminium prices, has fallen by over a quarter to $1,550 per tonne in August 2015 from $2,100 per tonne in August 2014. This has led to a sharp fall in the realizations of companies involved in manufacturing and selling aluminium in the market.

Three years ago the price was $2,555 per tonne.

On 22 July, a Vedanta official had said that Vedanta Aluminium—another aluminium producing subsidiary of Vedanta—is considering layoffs and other austerity measures to weather the impact of falling aluminium prices on the LME.

“If at any point of time any further debacle happens, (like the) LME crashes further, obviously the domestic aluminium producers will have no room to operate," Abhijit Pati, chief executive officer of Vedanta Aluminium, told Reuters on Tuesday.

On Wednesday, shares of Vedanta fell 8.03% to 113.90 apiece on the BSE while the benchmark index Sensex fell by 1.27% to 27,512.26 points.

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Published: 12 Aug 2015, 09:48 PM IST
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