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Hindalco Industries, an Aditya Birla Group company, plans to invest ₹1,000 crore in downstream expansion to increase the contribution of aluminium and copper value added products in overall sales.
Hindalco MD Satish Pai told BusinessLine that over the next five years the company will invest ₹3,000-4,000 crore in downstream expansion and target an additional Ebidta of $150-$200 a tonne.
“We are committed to be capex disciplined and have tight control on cash flow. The company can speed up the downstream investments to boost profits if the process of deleveraging is executed faster,” he said.
As of the December quarter, the company has consolidated debt — including that of its American subsidiary Novelis Inc — of ₹67,248 crore spread over five years. The focus is on pre-paying loans to reduce the interest outgo. The company has secured an enabling resolution to raise up to ₹5,000 crore through qualified institutional placement to pre-pay loans and embark on downstream expansion.
“We will repay a debt of ₹1,400 crore by March. We are going to accelerate deleveraging and want to reach a debt-Ebitda level of 3 from the current 4.5. If the deleveraging process is accelerated I can concentrate on downstream expansions,” Pai said.
If aluminium and copper prices on LME stay higher, the company can deleverage faster and invest in less capital intensive downstream projects, he added. Hindalco plans to set up a third copper rod plant of 2.30 lakh tonnes at Dahej in Gujarat by February next year, taking the overall capacity to 3.90 lakh.
“The construction work of the third copper rod plant will be over by the end of this year and production is expected to start by early next year. With this, 90 per cent of copper cathode will be converted into rods,” he said
Hindalco has copper cathode production capacity of 4.30 lakh tonnes.
In aluminium, the proportion of value added products such as flat rolled products, foils and extrusions is about 3.40 lakh tonnes and the plans are on to double it in five years. The company will add 50,000 tonnes of aluminium value added products next year, said Pai.
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