The scrip is poised for a rally as the aluminium price both domestically and internationally have started hardening. In the last one month, the scrip has moved from Rs 49 to Rs 73, however after shocks of the Kargill attack have forced the scrip to settle around Rs 67.

Indal, a 54 per cent subsidiary of Alcan Aluminium of Canada, is the largest downstream fabricator of primary aluminium in India. The company's operations are vertically integrated and include bauxite mining, alumina refining, power generation, primary aluminium smelting and semi-fabrication facilities and recycling. The company's product mix mainly consists of semi-fabricated products, which contribute over 70 per cent of its operating income.

The company's strong position in the semi-fabricated business emanates from its market leadership insheet products and its significant presence in the foils segments. The company's position in the later will further strengthen as Indal proposes to increase its stake in Annapurna Foils from present 24.5 per cent to 51 per cent.

The company's diversified product mix, good product quality, large customer base and proximity to markets resulting from well-spread manufacturing facilities give it a edge over other aluminium manufacturers.

These strengths have enabled the company sustain its market shares and also command a premium over its competitors. These strengths are, however, tempered by the company's dependence on external sources for meeting a portion of its metal requirements.

Although the aluminium prices have started moving up but with the domestic demand also picking up, the company should not have any problem in passing on the price rise to customers. Analysts expect the aluminium prices to remain firm globally in 1999 mainly on account of revival in the global economy and no additional capacitycoming up. International aluminium prices have been moving up since the beginning of 1999 and have already moved up from US$ 1,100 per tonne (its five year low) to $1300 per tonne on London Metal Exchange (LME). Indian aluminium fetches premium of $60 per tonne in US.

The domestic demand is expected to grow by five to six per cent leading to rise in prices. Currently, aluminium (22 gauge) is trading at Rs 97-98 per kilo, 30-gauge aluminium at Rs 107-108 per kilo, aluminium 36-gauge at Rs 109-113 per kilo and the aluminium rod at Rs 90 per kilo.

Indal should be able to encash the rising demand. To further improve its earnings in future the company for the current fiscal has earmarked Rs 150-200 crore towards capital expenditure for various expansion programmes. The company plans to double its alumina capacity at the Belgaum refinery besides a phased expansion at the Muri refinery in Bihar from 80,000 tonnes per annum to 250,000 tonnes per annum. Indal is also planning to increase its sheet and foil outputthrough upgradation and modernisation of its facilities with support from the parent.

Modernisation of its downstream rolling facilities will help not only enhance the capacity utilisation and improve product quality and finish but also reduce fabrication costs. This will help in improving profit margins. Even the company's access to low-cost captive coal through the coal block allotted to it in Orissa would add to its cost advantage to the expansion.

The sluggish demand and slow growth in end-user segments had impacted company's performance for fiscal 1998-99. However, the company used the hard times to improve on its operational efficiencies, higher capacity utilisation and better management of working capital in terms of inventory and receivables, good export realisation for alumina chemicals.

For the nine-month ended December 31, 1998, the company reported a net profit of Rs 48.33 crore on a turnover of Rs 749 crore. However, analysts expect the company to report a net profit of Rs 92 crore forfiscal 2000.