The Hindu Business Line : Hindalco fourth quarter net jumps to Rs 448.5 cr

HINDALCO Industries Ltd's net profit has increased to Rs 448.5 crore in the fourth quarter (Rs 222.2 crore). Net sales and operating revenues were Rs 2,515.7 crore (Rs 1,889.4 crore for the year ago period).

The FY04 Q4 figures quoted have not been restated to reflect the results of Indal, which was merged with Hindalco in 2004-2005. For the whole of FY05, Hindalco registered a 58.46 per cent rise in net profit to Rs 1,329.4 crore (Rs 838.9 crore) on a 53.39 per cent gain in net sales and operating revenues to Rs 9,523.3 crore (Rs 6,208.4 crore).

When compared to restated-full year FY04 figures officially stated at a press briefing, the increase in net sales was a more restrained 24 per cent and that in profit after tax, 37 per cent. The directors have recommended a dividend of Rs 20 (Rs 16.50) per share.

In FY05 LME prices for aluminium and copper had touched new highs, but there were additionally rupee appreciation and import duty reductions to cope with, Mr Debu Bhattacharya, Managing Director, Hindalco, said. TCRC (treatment & refining charges) in copper, critical for Hindalco's custom smelter, began recovering towards the end of last year. Its beneficial impact would be seen into FY06.

Forty five per cent of the company's revenue came from copper and 55 per cent from aluminium. On the other hand, aluminium contributed 84 per cent of EBITDA while copper's share was 16 per cent. With inbound and outbound logistics cost a concern for custom smelter operations, scale of operation that helps to reduce cost is the key to growth in copper, Mr Bhattacharya said.

Brownfield expansion in copper from 2.5-lakh tonnes to 5-lakh tonnes is on schedule at Dahej. When completed, Birla Copper would be the world's largest smelter at a single location and be among top 15 per cent cost competitive producers. By September-October this year, the Nifty and Mt Gordon mines in Australia would supply 20 per cent of the smelter's copper concentrate needs.

Mr Bhattacharya said the company proposes to enhance that captive share to 40 per cent for which it would seek more mines. Global copper consumption in 2005 is estimated to grow at a moderate 2.4 per cent after growing at 8.8 percent in 2004.

The alumina capacity at Hindalco's Muri works is being increased from 1.1-lakh tonnes to 4.5-lakh tonnes at a capital cost of $170 million. This is projected to drop cash cost of production to $117 per tonne. At the Belgaum refinery, capacity is being raised from 3.5-lakh tonnes to 6.5-lakh tonnes at a capital cost of $150 million. This would drop cash cost of production to $130 per tonne. Capacity for high value special alumina there is being hiked to 1.67-lakh tonnes from 91,000 tonnes. Belgaum would be the centre for Hindalco's special alumina operations.

Global aluminium demand had grown by 9.3 per cent in 2004. In 2005, demand is likely to grow by 4-5 per cent due to the softening of demand in the US, Western Europe and China. "Perhaps prices will soften but it will still be at respectable levels,'' Mr Bhattacharya said on price trends in aluminium and copper.

Earlier this month, Hindalco signed an MoU with the Orissa Government for setting up the one-million tonne Aditya Aluminium project costing Rs 11,000 crore. Work on Utkal Alumina, where Hindalco holds 55 per cent equity share, has begun. Financial details are yet to be firmed up.

Last month,the company tied up a 10-year secured rupee term loan facility of Rs 4,950 crore priced at a spread of 65 basis points over the 5-year sovereign for its expansion projects.

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