Company Outsider | Novelis and after: How Hindalco cracked the foreign buyout code

The Novelis takeover became a crucial testbed for Hindalco to learn how to ascend the value chain while absorbing cutting-edge production technologies. Subsequent acquisitions have consistently provided access to sustainable manufacturing technologies, especially in low-carbon aluminum production.
Hindalco Industries, the metals flagship of the Aditya Birla Group, offers a compelling case study in how strategic overseas acquisitions can deliver substantial long-term gains. Its recent $125 million purchase of specialty alumina maker AlumChem Companies, for instance, directly traces its lineage to the 2007 purchase of Novelis Inc. for approximately $6 billion in a deal Group Chairman Kumar Mangalam Birla aptly described as a “landmark transaction."
This foresight has indeed paid off. While it faces major challenges stemming from the inherent nature of the cyclical and capital-intensive metals industry, it has kept evolving and building its capabilities through smart and strategic takeovers.
Thus, the Novelis takeover proved instrumental in its pivot towards high-margin can sheets used by beverage giants like Pepsi and Coca-Cola. It transformed Hindalco from a primary aluminum producer into a leader in value-added products. The latest AluChem acquisition further strengthens this trajectory, positioning Hindalco to supply critical materials for growth sectors such as electric vehicles, semiconductors, precision ceramics, aerospace, and medical applications. Similarly, the latest move to buy the Cincinnati-based AluChem, with its manufacturing facilities in Ohio and Arkansas, builds upon Hindalco's 2020 purchase of Aleris and strengthens the company’s standing as a global manufacturer with sophisticated capabilities. AluChem operates in the advanced materials business, a sector that has seen a flurry of recent M&A activity, including Applied Nanolayers by Black Semiconductor, Kabkom by HEXPOL, and Filament Innovations by Proteor, all three in 2025. With Hindalco aiming to double its specialty alumina capacity by FY30 even as it competes with industry titans like Rio Tinto Group and Aluminum Corporation of China, these overseas assets are a necessary springboard.
Beyond market expansion, the AluChem inclusion to its portfolio aligns Hindalco with cleantech sectors through its buyer profile. This is a crucial step for the Indian company as it strives to project itself as an environmentally conscious enterprise. The firm was recognized as the world's most sustainable aluminum company in the 2024 S&P Global Corporate Sustainability Assessment, significantly outperforming competitors like Norsk Hydro ASA and Alcoa Corporation.
Hindalco's acquisition strategy fits into the template of successful cross-border M&As: the ability to evolve beyond initial expectations and objectives. Analysts initially questioned the ticket size of the Novelis deal, given that the Canadian company was loss-making at the time and aluminum prices were projected to decline. This scepticism even led to a 13% drop in Hindalco's stock price, reflecting shareholder concerns. Similarly, the $2.8 billion price tag for the Aleris in 2020 raised eyebrows.
However, these decisions were underpinned by shrewd strategic thinking that looked beyond immediate financial metrics. Aleris's expertise in specialized aluminum alloys for aerospace applications provided Hindalco direct entry into a high-end, high-margin market requiring advanced technological capabilities. As an added benefit, Aleris's robust recycling operations reinforced Hindalco's position as the world's largest aluminum recycler.
The cost of these acquisitions effectively served as a substitute for the significant investment Hindalco would have otherwise needed to develop and commercialize the technologies and processes they brought. The Novelis takeover, in particular, became a crucial testbed for Hindalco to learn how to ascend the value chain while absorbing cutting-edge production technologies. Subsequent acquisitions have consistently provided access to sustainable manufacturing technologies, especially in low-carbon aluminum production, directly aligning with global decarbonization trends.
The results are evident. Leveraging the capabilities acquired from Novelis and Aleris, Hindalco's R&D team developed 53 new products in FY24-25 and secured over 560 patents. This innovation spans high-end alloys and designs for green mobility, renewable energy, and aerospace.
Hindalco’s journey aligns with the findings from a 2021 research paper, "Cross-border mergers and acquisitions for innovation." The study, based on 85,591 M&A deals from 57 countries, highlighted how cross-border takeovers, particularly when firms from less innovative countries acquire targets from more innovative ones, significantly boost the acquiring firms' technological competence, patent generation, and R&D investment.
Significantly, the company’s success stands in stark contrast to the grief that visited many other Indian companies following the M&A frenzy of 2006-07. During that period, Indian conglomerates, fuelled by easy money from banks, embarked on numerous overseas acquisitions. Outward foreign direct investment from India soared from $1 billion in 2001-02 to $18.6 billion in 2008-09. However, much of this capital proved to be wasted on failed deals. In this context, Hindalco’s nearly two-decade-long, calculated acquisition strategy serves as a powerful example of successful global expansion.
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