Hindalco Industries, an Aditya Birla Group company, has decided to re-evaluate two of its proposed investments in Jharkhand and Odisha due to prolonged delay in getting government approvals. The company planned to set up an aluminium refinery in Odisha and aluminium smelter in Jharkhand with a cumulative investment of Rs 16,000 crore.

D. Bhattacharya, Managing Director, Hindalco, said the company wants to be certain that the approvals would come before putting money on the ground.

“It would take about three to four months for us to decide on these projects. Even the Mahan and Utkal projects, which were commissioned recently, had taken more time for completion than what we would have preferred,” he said.

The company expects the second stage clearance for the Mahan coal block to come in by December. As part of the afforestation criteria, Hindalco has created a forest on 3,000 hectares to compensate the land it got for commercial use.

“We would submit our application in a month’s time and the approval should come by end of this year. It would take another year to start coal production at the block,” said Bhattacharya.

On raw material security, he said the company has enough bauxite reserve to feed Utkal refinery for 25 to 30 years. The refinery has a capacity to produce 1.5 million tonne of alumina a year.

“With the adequate raw material support, we have the lowest cost among the aluminium producers,” said Bhattacharya.

The company recently refinanced Rs 5,000-crore debt with fresh rupee debt which will result in a saving of Rs 150 crore a year.

However, finance cost in the June quarter was up 82 per cent at Rs 149 crore due to higher average borrowings in the quarter. Hindalco has a gross debt of Rs 20,000 crore and net debt of Rs 13,000 crore.

Hindalco Industries reported 12 per cent increase in net profit at Rs 474 crore (Rs 425 crore) largely due to the other income of Rs 225 crore which includes gains from treasury operations. It also received dividend from subsidiaries and one-time income of Rs 203 crore.

Revenue from operations was down three per cent at Rs 5,838 crore (Rs 6,028 crore) due to lower copper production and fall in aluminium prices. Revenue from aluminium business was up seven per cent at Rs 2,211 crore.

Aluminium prices on the London Metal Exchange were down seven per cent at $1,834 a tonne ($1,977 tonne). The metal price in rupee term was down four per cent at Rs 102 a kg (Rs 107 a kg) despite rupee depreciating by three per cent.

Novelis, a subsidiary of Hindalco, reported two per cent fall in shipments at 708,000 tonnes and EBITDA was down by 21 per cent at $204 million.

Hindalco shares on the BSE were down two per cent at Rs 91.45 on Tuesday.

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