Copper and aluminium major Hindalco's 19 per cent growth in consolidated sales for the full year ending FY-11 was aided by superior realisations from its aluminium products and higher shipments by subsidiary Novelis.

While the reported EBITDA and net profit witnessed a decline, adjusted for Rs 2,736 crore of unrealised derivative gains of the subsidiary in the previous year, profits at the operating and net level have expanded.

Sustainable EBITDA for FY-11, for instance, was higher by 25 per cent. This, despite a good four percentage point increase in raw material costs as a proportion of sales. Interest costs too, rose marginally on account of borrowings to fund both brownfield and greenfield projects. Outstanding loan funds increased Rs 3,700 crore over the last one year to Rs 27,700 crore.

Subsidiary shines

Novelis posted a 10 per cent increase in shipments on the back of increase in demand for sectors such as automobile, food processors and electronics.

The subsidiary made a profit in the fourth quarter against losses a year ago. The realisations for the quarter would have averaged higher than the 15 per cent increase in LME aluminium contract prices for the March quarter over a year ago on account of selling value-added aluminium products. This also boosted the annual adjusted (for derivative transactions) pre-tax profits which doubled over a year ago.

The parent, which has seen few major capacity additions over the last few years, posted flat annual sales volumes of aluminium and copper.

Depressed TcRC (treatment and refining charges) compared with FY2010 did little to help the copper segment's profits. TcRC is a fixed charge earned by the company for processing copper concentrate in to cathodes among other products. This is one of the reasons for the poor show by this segment despite a strong rally in copper prices.

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