The Hindu Business Line : Hindalco’s Q2 net profit rises 12% at Rs 720 cr

Mumbai, Oct. 31 Despite aluminium and copper prices falling sharply on the London Metal Exchange, prudent cost control and higher alumina production have helped Hindalco Industries, an Aditya Birla Group company, to post a 12 per cent rise in net profit in the second quarter of the financial year ended September 30.

Mr D. Bhattacharya, Managing Director, Hindalco Industries, said efforts to reduce financial and variable cost led to a better realisation despite weakening demand for aluminium and copper. Besides, the rupee depreciation against dollar has also helped, he added.

Of the total revenue of Rs 5,683 crore recorded in the quarter under review aluminium business contributed Rs 2,120 crore against Rs 1,792 crore in the same period last year, while the copper business chipped in with Rs 3,565 crore (Rs 3,178 crore).

Rising input cost, lower production of downstream aluminium products have constrained profit from the aluminium business, while steep depreciation of rupee against dollar affected the copper business by an estimated Rs 214 crore (Rs 38 crore) in the quarter under review. Alumina production improved 5 per cent to 2.96 lakh tonnes (2.82 lt) and primary metals up 11 per cent to 1.31 lt (1.81 lt).

Copper cathodes production was down 2 per cent at 77,540 tonnes (79,181 tonnes) and copper cathode rods output dipped to 34,293 (35,335) in the quarter under review.

Apart from $1 billion raised through the rights issue, the company has tied up $1 billion loan through 11 foreign banks including Deutsche Bank, Royal Bank of Scotland, Citi Bank, Bank of America and three Japanese banks.

The balance of the bridge loan will be repaid through internal accruals.

“The company has $2 billion in cash invested in various short term schemes. We have already liquidated a portion of this to repay,” said Mr Sunirmal Talukdar, Chief Financial Officer, Hindalco Industries.

The expansion of the Muri alumina refinery from 1.10 lakh tonnes per annum to 4.50 lakh tpa is almost complete. “Production of about 2.10 lakh tpa has already started which will be ramped up to the targeted 4.53 lakh tpa by end of this year, Mr Bhattacharya said.

The business will be impacted by the overall slow down in the global economy. The short-term outlook seems negative, however long term market fundamentals remain strong. The company’s stocks on the BSE rose 13 per cent to Rs 60 on Friday.

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