Hindalco Industries faced challenging times with domestic aluminium demand remaining strong and LME-benchmarked prices dropping amid increasing cost of production. The company managed to ride the difficult times with its focus on downstream products. Satish Pai, Managing Director, Hindalco Industries, shares his views on the way ahead. Excerpts:   


Will demand for aluminium and copper sustain given the economic uncertainty?

The demand for both aluminium and copper has been strong in India across sectors and this is expected to remain strong given the growth momentum. Globally, aluminium supply has been tight. Going ahead, global demand will depend on what is happening in the US and China. The recent inflation and other numbers, released by the US, looks like they will not slip into a recession. Shanghai is struggling to come out of lockdown as part of its zero-Covid policy. We need to keep a watch on these countries to ascertain the global demand for aluminium and copper.


Will the cost pressure ease in the coming months?

Coal prices have started coming down due to slowing demand from power producers. We hope with coal supply increasing, the government will lift the 75-per cent cap on linkage coal supply. Coal prices have doubled compared to last year, but I believe it has peaked and will fall in the coming months. About 40 per cent of aluminium production cost is power and coal. The cost of imported pet coke will go up due to rupee depreciation, but its impact will be minimal.


Are you planning to cut capex given the current challenges?

We are sticking to our capex plan of ₹3,000 crore for this year, but will be spending about ₹2,500 crore. This is due to the delay in getting some statutory approvals and delay in supply of machinery from Europe. It has nothing to do with the current economic uncertainty. We have about ₹10,000 crore as surplus in the balance sheet. Moreover, the projects being implemented will go on stream in three years and by then, demand will bounce back.


How do you plan to utilise the ₹1,000-crore fund being raised?

We had availed a bank loan of ₹2,500 crore last March and as per regulations, we have to raise 25 per cent of this via corporate bonds. So we had taken the board approval for this fund raise. Ultimately, we may not raise ₹1,000 crore, but restrict it to the mandatory requirement.


Are aluminium imports still a worry?

Yes, it is a concern. The government is in the process of investigation for levying anti-dumping duty, as there can be dumping by China due to slowdown in their economy. China exports about 4-5 million tonne of aluminium to Europe. Now with the crisis in Europe, these products can be diverted to India at a lower price.


Will US slowdown hit Novelis?

About 60 per cent of Novelis’ business comes from can body, which is kind of recession-proof. The auto business accounts for 20 per cent and here, the company has a good order-book. Building and construction materials account for the remaining, and this may see some slowdown in demand.