Aditya Birla Group has increased its stake by four per cent in the past two months in Hindalco Industries, its aluminium and copper producingr company. The promoters' current stake is 36 per cent, against 32.08 per cent at the end of June.
This is seen as part of the Group's plan to increase its holding across its companies. The chairman, Kumar Mangalam Birla, said, "We are looking to increase the promoters' holding in the current financial year and we will consistently increase stake from the current 36 per cent."
However, he added that increasing stake was not prompted by any threats to the company. He was speaking at Hindalco's 51st annual general meeting today.
The company has a capital expenditure plan of Rs40,000 crore over the next five years, of which it is spending Rs10,000 crore in the current financial year and Rs11,000 crore in 2011-12.
In response to a shareholder’s query, Birla said there were no acquisition plans of a processing unit. The last buyout, of Novelis, has started bearing fruit. "Novelis is on track to achieving its target of $1 billion Ebitda (earnings before interest, depreciation, taxes and amortisation) in FY11," he said. In the last financial year, the Ebitda of Novelis was $754 million, a rise of 55 per cent over the previous year.
The company declared a dividend of Rs1.35 per share on the enhanced share capital, post the qualified institutional placement (QIP). Last year, the company had raised $600 million through the QIP route.
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On the Bombay Stock Exchange, shares of Hindalco closed weak on Friday at Rs170.40, down 1.5 per cent in a flat market.
Hunt for mines and metal consumption opportunities
While it is not planning to buy more processing units for now, Hindalco is on a lookout for more copper mines. D Bhattacharya, managing director, said, "We are looking for copper mines across the world.”
He added metal consumption demand was likely to go up. On the outlook for the aluminium sector, he said the demand for lightweight cars was going up due to the stricter emission norms, which provided a good opportunity for consumption of aluminium. "The auto sector is coming back to its old glory days, with volume going up," added Bhattacharya.
The assets of the closed Rogerstone plant in the UK were being moved to Hirakud in Orissa, near Hindalco's smelter. "This will act as a hub for can body stock and help grow the promising beverage can market in India," said Birla. To which Bhattacharya added that the rising use of cans provided enormous opportunity for aluminium consumption.
As for prices, the company is hopeful that prices of metals may not fall. Bhattacharya said the possibility of a substantial reduction on the London Metal Exchange was unlikely.
Capex
As for expansion, the company is undergoing Rs40,000 crore of captal expenditure, both on new projects and for expanding existing ones. These are all likely to go on stream between 2012 and 2014.
Among the latter, smelter expansion at Hirakud from the current 155 kilotonnes per annum (ktpa) to 213 ktpa by 2012-end is underway. The company is evaluating a further increase in capacity to 360 ktpa, to accompany an increase in its captive power unit’s capapcity from the proposed 467.5 Mw to 967.5 Mw.
As for new projects, Utkal Alumina, Hindalco's 100 per cent subsidiary, is setting up an alumina refinery of 1.5 million tonnes per annum (mtpa) in Orissa. The project will commission in the second quarter of 2011-12. The company plans to take this capacity further up to 3 mtpa. Other new projects include Mahan Aluminium (a 359-ktpa smelter and a 900-Mw captive thermal power plant in Madhya Pradesh, to be ready by September 2011), Aditya Alumina (a 4.2 million-tpa bauxite mine, 1.5 million-tpa alumina refinery and 359-ktpa smelter, in Orissa) and Jharkhand Aluminium (a 359-ktpa smelter and 900 Mw captive power unit).