|
31
October 2008
Hindalco
announces outstanding results for Q2 FY09
Click
here to view the results
Financial highlights
| (In
Rs. crore) |
Quarter
ended
30 Sep 2008
|
Quarter
ended
30 Sep 2007
|
Half
year
ended
30 Sep 2008
|
Half
year
ended
30 Sep 2007
|
| Net sales and
operating revenues |
5,683.2
|
4,966.9
|
10,330.7
|
9,652.1
|
| Other
income |
176.8
|
109.7
|
391.4
|
234.4
|
| EBITDA |
1,170.2
|
1,032.2
|
2,333.9
|
2037.9
|
| Depreciation |
159.2
|
145.5
|
316.0
|
289.2
|
| Interest and financing
charges |
85.5
|
63.3
|
161.6
|
119.6
|
| Profit
before tax |
925.5
|
823.4
|
1,856.3
|
1,629.1
|
| Provision for taxes
|
205.6
|
180.8
|
439.6
|
387.9
|
| Net profit |
720.0
|
642.6
|
1416.7
|
1241.2
|
| EPS (Basic) |
5.87
|
5.78
|
11.55
|
11.21
|
Hindalco
Industries Ltd., the flagship company of the Aditya
Birla Group, today announced its unaudited financial results
for the quarter ended 30 September 2008.
Net sales and revenues have grown by 14 per cent to Rs. 5,683.2
crore as compared to Rs. 4,966.9 crore for the corresponding
period in FY 08. Despite the unrelenting input cost push that
squeezed margins, the net profit for the quarter at Rs. 720
crores is up by 12 per cent, vis-à-vis Rs. 642.6 crore
in the corresponding period of the previous year.
Of the total revenue of Rs. 5,683.2 crore, the aluminium business
contributed Rs. 2,120.5 crore as compared to Rs. 1,792.2 crore
in corresponding period in previous year. The profit before
interest and tax for aluminium business was at Rs. 715.1 crore
as against Rs. 661.9 crore in the corresponding quarter in
the previous year driven by production, asset sweating, higher
LME and a weaker Rupee. Rising input cost, lower production
of downstream products have constrained profit to an extent.
In the copper business, revenues stood at Rs.3,565.3 crore
up by 12 per cent vis-à-vis Rs. 3,178.3 crore in Q2FY08
on back of higher realisation, enriched market mix and a weaker
rupee. The profit before interest and tax grew to Rs. 138.1
crore from Rs. 126.1 crore in the corresponding quarter last
year despite a 44 per cent fall in TcRc, mainly due to better
by-product realisation and operational efficiencies.
The steep depreciation of the Indian Rupee against the US
Dollar affected the copper business by an estimated Rs. 213.9
crore for the quarter under review, as a result of restatement
of net foreign currency exposures as on 30 September 2008.
For the corresponding quarter of the previous year, this had
an estimated favourable impact of Rs. 38.3 crore. Consequently,
the PBIT of copper business is lower than the corresponding
quarter of the previous year by Rs.252.2 crore.
Take
out of bridge loan
The company is pleased to announce the repayment of the USD
3.03 billion bridge facility taken to fund the acquisition
of Novelis Inc on 16 May 2007. The bridge facility is to be
repaid by 12 November 2008.
The repayment of the bridge facility was financed partly by
way of rights issue of equity shares to the existing shareholders,
and as to the balance, by way of term debt and internal accruals.
- Rights
issue
The company has issued 525,802,403 equity shares of Re 1
each on rights basis at a price of Rs. 96 per share as fully
paid-up vide Letter of Offer dated 13 September 2008 against
which allotment has been made for 473,398,534 equity shares
on 23 October 2008. The net proceeds of the issue are being
utilised to part finance repayment of bridge loan taken
for acquisition of Novelis during last year.
- Other
sources
The balance of the bridge loan will be repaid by sourcing
debt financing and liquidation of treasury.
Operational
review
Aluminium
With the expansion at Muri and Hirakud, alumina production
has risen up by 34 per cent at Muri and metal production by
39 per cent at Hirakud. The overall metal production was up
by 11 per cent.
Lower production of rolled products is mainly due to stoppage
of cold rolling mill at Mouda, which is now operational. The
extrusion production at Alupuram has been impacted by 25 per
cent power cut by the state electricity board. Foil production
is lower on account of changes in product mix.
| Production |
Units
|
Q2
FY09
|
Q2
FY08
|
Half
year
ended
30 Sep 2008
|
Half
year
ended
30 Sep 2007
|
| Alumina |
MT
|
296,408
|
282,292
|
599,885
|
584,722
|
| Primary
metal |
MT
|
131,314
|
118,257
|
255,201
|
234,426
|
| Wire
rods |
MT
|
17,888
|
18,031
|
36,046
|
35,464
|
| Rolled products |
MT
|
45,172
|
57,273
|
96,506
|
114,366
|
| Extruded products |
MT
|
10,206
|
11,107
|
21,225
|
21,293
|
| Foils |
MT
|
6,647
|
7,510
|
13,930
|
14,907
|
| Wheels |
Nos.
|
48,068
|
41,576
|
95,060
|
86,152
|
| Power |
MU
|
2,403
|
2,102
|
4,623
|
4,266
|
Copper
The copper cathodes and CC rods production declined marginally
by 2 per cent and 3 per cent respectively over corresponding
quarter in FY08. The operations at copper smelter –II continue
to be suspended.
| Production |
Units
|
Q2
FY09
|
Q2
FY08
|
Half
year
ended
30 Sep 2008
|
Half
year
ended
30 Sep 2007
|
| Copper cathodes |
MT
|
77,540
|
79,181
|
137,974
|
158,415
|
| C
C rods |
MT
|
34,293
|
35,335
|
64,458
|
69,430
|
Expansion
projects
Muri
The expansion of the Muri alumina refinery from 110,000 tpa
to 450,000 tpa is mechanically complete. Production is being
ramped up in a phased manner. The entire steam and power requirement
is being met by the new captive power plant. The production
from the expanded facility is slated to reach its full capacity
by the end of the year.
Hirakud
Phase II of the expansion of the smelting capacity from 100,000
tpa to 143,000 tpa was completed on time. Further work on expansion
to 151 kta is in progress and is expected to be over by August
2009. The power generation capacity has been raised from 267.5
mw to 367.5 mw. All the units have been commissioned.
Belgaum
The allotment of the lease of bauxite mines for expanding the
alumina refinery capacity at Belgaum, Karnataka from 350 ktpa
to 650 ktpa is still awaited.
Aditya Aluminium Project
Aditya Aluminium, the integrated aluminium project, encompassing
1 to 1.5 million tpa alumina refinery, 260,000 to 359,000 tpa
aluminium smelter and 750 to 900 mw captive power plant is on
track. A major portion of the total land required for the project
has been acquired. Environmental clearances have been obtained
for the smelter, the captive power plant (CPP) and the alumina
refinery. The water drawal agreement has also been executed.
The power for construction is already in place. The construction
of transmission lines and upgradation of substations to draw
power are in progress. The first metal from the smelter is scheduled
to be produced by October 2011. The refinery is due to be mechanically
completed by January 2013. The technology contracts for the
smelter and alumina have been executed with Aluminium Pechiney
and Alcan respectively. The basic engineering activities for
the smelter and CPP have commenced. The enquiries for long delivery
equipment and packages have been floated; these are to be finalised
before the end of this fiscal year.
Mahan project
The Mahan aluminium project with a smelter capacity of 359 ktpa
and CPP of 900 mw is on track. The land acquisition for the
project is underway. The company has been allotted a coal block
in a JV with the Essar group for the coal requirement of the
CPP. Preliminary environmental clearances have been obtained.
The power connectivity for commencing construction has been
approved. The water resource department has allocated the necessary
water source. The production of coal is expected to start by
October 2009. The technology contract for the smelter has already
been executed with Aluminium Pechiney. The basic engineering
activities for the smelter and CPP are in progress and first
metal from the smelter is expected by July 2011. The enquiries
for long delivery equipments and packages have been floated,
and will be finalised before the end of this fiscal year.
Jharkhand project
The proposed smelter capacity of the Jharkhand aluminium project
is 359 ktpa and a CPP of 900 mw. The plant location is being
shifted from Latehar to Sonahatu block which is 20 km from Muri
and 55 km from Ranchi. The company has submitted an application
for the government land. The government of Jharkhand has given
the water allocation clearance for 55 mcm of water from Subernrekha
basin. Tubed coal mine has been allotted jointly with Tata Power.
The technology contract for the smelter has already been executed
with Aluminium Pechiney. The tentative date for the first metal
from the smelter is June 2012.
Utkal
The construction of Utkal alumina refinery with a proposed capacity
of 1.5 mtpa is currently underway. The company has acquired
the land for the plant and other facilities. The basic engineering
packages have already been received from Alcan (technology supplier).
Major packages have been ordered. The detailed engineering for
the main plant area is nearing completion. The civil works for
alumina refinery and captive power plant is in progress. Bauxite
mining activities are expected to start by end 2009. The mechanical
completion of the plant is slated for January 2011 and the first
alumina is expected to be produced around July 2011.
Hindalco Almex Aerospace Limited
This joint venture company for the manufacture of high-strength
aluminium alloys for applications in the aerospace, sporting
goods and surface transport industries is at an advanced stage
of implementation. All key equipment have arrived at the site
and are under commissioning. The project will be completed shortly.
Industry outlook
Aluminium
Global aluminium demand growth is now expected at 6 per cent
as against the earlier estimate of 8 per cent. The sharp slow
down in global demand will result in higher inventory in 2009-2010
with the US recession and its extension to Europe having a major
impact. China is also showing signs of moderation after a sharp
run up in demand.
At the same time, weakness in supply is a comforting factor
as capacities are shutting down in the western world, Africa
and recently in China due to power related issues.
Falling aluminium prices are leading to cuts in production/capacities
as increasingly capacities become unviable. China is expected
to be net importer in 2009.
Copper
Low exchange stocks and strong fund interest in base metals
maintained copper prices at higher level during this period.
However, tighter credit policy and slower investment growth
are likely to slow down copper demand growth globally. While
recent disruptions at major mines could affect the copper
supply side, this is not likely to change the overall stocks
significantly due to a fall in consumption in US and Europe.
Global copper consumption is likely to increase by 3.2 per
cent this year.
Smelter
production worldwide is adversely affected due to lower copper
in concentrates and use of more complex materials. Smelters
in Asia other than China are well covered in the short term
which has improved spot TCRC from last quarter. Negotiations
for 2009 between the mines and smelters are likely to be prolonged
as smelters would ask for substantial improvement in TCRC
over last year due to sharp decline in the sulphuric acid
prices and mines would resist due to the expected decline
in copper prices.
Prices
have come under severe pressure and would continue to be depressed
in the current unstable macro economic environment
Company
outlook
The business will be impacted by the overall slow down in
the global economy. The short-term outlook seems negative,
however long-term market fundamentals remain strong.
The adverse macro-economic factors will continue to impact
the business. The company is closely monitoring changes in
the global economic and business landscape and taking proactive
measures to tide over and emerge stronger from the global
crisis. The ramp up of brownfield expansions, enhanced asset
productivity and containment of input cost along with effective
working capital management to maximise free cash flow will
be the major growth drivers.
|
14 per cent
