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Hindalco Industries plans to repay ₹6,000-crore debt from next June to bring down its debt further.
The company has reduced its net debt to ₹66,831 crore as of September-end against ₹78,266 crore recorded in the same period last year.
Satish Pai, Managing Director, Hindalco Industries, told BusinessLine that the current net debt to EBITDA level in India is about 1.25 times and repayment of bonds worth ₹6,000 crore is coming up from next June.
This will be repaid completely from internal accruals as about ₹30,000 crore is lying in the treasuries, he added.
Green energy
Hindalco, one of the largest power-intensive companies, plans to outsource its green energy requirement by signing an agreement with third-party contractors to set up solar projects at its factories and source power at a fixed price.
The company will enhance solar power sourcing from 57 MW to 100 MW by next March and will increase it further to 200 MW by 2025. “The capex for the solar project will be put in by the green power producers. We will sign a long-term 20 years power purchase contract with the green power suppliers. It will be a fixed price with an escalation clause like in any other power contract,” said Pai.
Though aluminium demand in India has started reviving post slowdown during the monsoon season, it is still lagging behind the pre-Covid levels.
Among the major aluminium consumers, the auto sector was hit by a semi-conductor shortage while demand from power conductor cables makers is also behind pre-Covid levels.
Besides these two sectors, the overall demand for aluminium is quiet strong and Hindalco’s capacity is completely sold out, said Pai. At the industry level, aluminium consumption now is about 9.40 lakh tonnes a quarter and it was about 10 lakh tonnes pre-Covid. Despite a severe shortage of coal, Hindalco managed to keep the production intact by increasing coal inventory and switching coal transportation from rail to road. Though the supply was tight, the company was never in a hand-to-mouth situation, he added.
Hindalco expects aluminium prices will be firm as the demand is expected to outstrip supply.
High raw material costs
The company expects the overall cost to go up by eight per cent in the December quarter compared to September-end, due to high raw material prices. The cost has already gone up five per cent in the September compared to he June quarter. Though margins will be hit slightly, the profitability will remain intact on firm LME prices, he added.
The slowdown in the global auto sector has affected the company’s US subsidiary Novelis sales and expects the semi-conductor shortage to continue into next year. The fall in auto sector demand is being made up by higher sales to beverage can and specialty sectors. Aleris, another subsidiary of Hindalco, sees green shoot in aerospace as demand and deliveries of planes have restarted, he added.
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