Operational efficiency lifts Hindalco Q4 profit 7%

Suresh P. Iyengar Mumbai | Updated on May 09, 2011


Hindalco Industries, an Aditya Birla Group company, has reported 7 per cent rise in net profit to Rs 708 crore (Rs 664 crore) in the fourth quarter ended March 31, largely due to production of higher-value added products and cost efficiency.

Sales rose 27 per cent to Rs 6,846 crore (Rs 5,397 crore) in the quarter under review.

Mr D. Bhattacharya, Managing Director, Hindalco Industries, said the company has managed to beat investor expectations by producing more metal for fixed assets, operational efficiency and concentration of value-added products, especially in the copper business.

“Our Group believes in anticipating and preparing for adverse situation, rather than finding a solution after approaching it. It will be interesting to note that we have a blueprint ready for this fiscal,” he added.

Other income was higher by 35 per cent at Rs 105 crore (Rs 78 crore) on the back of improved treasury yield and larger corpus, post return of capital from Novelis.

The benefits of the marked improvement in operational efficiencies were partially offset by lower TcRc (treatment and refining charges) and energy cost in copper business. Despite fall in TcRc, the company posted 61 per cent increase in copper EBIT (earnings before interest and tax) at Rs 206 crore by producing more value-added products, said Mr Bhattacharya.

The annual benchmark for TcRc for 2011 has been settled at about 20 per cent higher in negotiations between major global miners and smelters. Spot TcRc terms improved for smelters in recent months due to the temporary market surplus. The supply was tightened further after the recent earthquake in Japan has forced shot of smelters. The increase in spot TcRc may not continue for long as global concentrate market continue to suggest tightness till 2013-14.

Higher copper prices and the resultant intensification in competition from scrap-based products affected refined copper demand in India in FY'11, particularly in the wire and cable segments.

While these factors may continue to constrain refined copper demand in the coming months, the overall market growth may be broadly positive on account of robust trend in automobile and infrastructure sectors, he said.

The company's shares on BSE were up 0.67 per cent at Rs 203.

Published on May 09, 2011

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