 "We now plan to consolidate operations: D Bhattacharya")
Soon after announcing the December quarter’s financial results, D Bhattacharya, managing director of the Aditya Birla Group's flagship company, Hindalco Industries, took time off to discuss the performance and plans with Dev Chatterjee. Edited excerpts:
Are you satisfied with the performance in the quarter, where the net profit was substantially down when compared to December 2012?
Our business was impacted a lot by London Metal Exchange aluminium prices, which are at an 18-month low. The rupee’s depreciation versus the dollar helped us cushion some of its impact. As a lot of our new capacity is being commissioned now, our finance cost and depreciation charges have gone up. But we expect this to come down, once we ramp up production in the new plants to full capacity. The good news is during the quarter, we produced the highest ever of aluminium at 158 kt and our revenues are up 15 per cent. With all the expansion behind us, we now plan to consolidate operations. Also, we should look at Ebitda (earnings before interest, depreciation, tax and amortisation) for the nine-month period (April 1 -December 31), up 10.7 per cent. Our copper business has done very well, with its revenues up 21 per cent to Rs 4,817 crore.
We saved Rs 340 crore a year by refinancing our loans. This helped us to increase Ebitda Rs 1,648 crore as compared to Rs 1,560 crore in the same nine-month period of FY2013. As our plants become fully operational, this will come down substantially. The first metal was produced by Aditya Smelter last month.
The Mahan coal block (in Madhya Pradesh) has got Stage-II clearance from the Union environment ministry. How much time will it take to start production?
If all goes by the plan, the initial work should start in the next three months. It will then take another three months for the actual production. The local coal will help us cut production costs. But one of the biggest problems faced by Indian companies is uncertainty. So, we can't give an accurate production date.
Hindalco’s North American acquisition, Novelis, has been performing extremely well. What are your plans for it?
A lot of American automobile companies are now using aluminum to make their vehicles lighter. Just recently, Ford launched a new truck called the F-150 in the US, which has got a very good response due to this high content. Other car makers are expected to follow. This will change the industry’s dynamics, as car weight will come down 500-700 pounds per vehicle. We expect the demand to grow for our products and, hence, invested close to $1.5 billion to expand capacity.
Hindalco profit down 23%
Aditya Birla Group’s Hindalco Industries announced a 23 per cent fall in its net profit on Thursday, at Rs 334 crore in the December 2013 quarter as compared to Rs 433 crore in the same period of last year. Its net sales in the quarter were up six per cent to Rs 7,200 crore, as compared to 6,789 crore in the same period of 2012-13. The company’s stock fell three per cent to Rs 100 a share after the results were announced.
Are you satisfied with the performance in the quarter, where the net profit was substantially down when compared to December 2012?
Our business was impacted a lot by London Metal Exchange aluminium prices, which are at an 18-month low. The rupee’s depreciation versus the dollar helped us cushion some of its impact. As a lot of our new capacity is being commissioned now, our finance cost and depreciation charges have gone up. But we expect this to come down, once we ramp up production in the new plants to full capacity. The good news is during the quarter, we produced the highest ever of aluminium at 158 kt and our revenues are up 15 per cent. With all the expansion behind us, we now plan to consolidate operations. Also, we should look at Ebitda (earnings before interest, depreciation, tax and amortisation) for the nine-month period (April 1 -December 31), up 10.7 per cent. Our copper business has done very well, with its revenues up 21 per cent to Rs 4,817 crore.
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The company spent Rs 24,000 crore in expansion of facilities and your finance costs are high. Are you planning to refinance more loans?
We saved Rs 340 crore a year by refinancing our loans. This helped us to increase Ebitda Rs 1,648 crore as compared to Rs 1,560 crore in the same nine-month period of FY2013. As our plants become fully operational, this will come down substantially. The first metal was produced by Aditya Smelter last month.
The Mahan coal block (in Madhya Pradesh) has got Stage-II clearance from the Union environment ministry. How much time will it take to start production?
If all goes by the plan, the initial work should start in the next three months. It will then take another three months for the actual production. The local coal will help us cut production costs. But one of the biggest problems faced by Indian companies is uncertainty. So, we can't give an accurate production date.
Hindalco’s North American acquisition, Novelis, has been performing extremely well. What are your plans for it?
A lot of American automobile companies are now using aluminum to make their vehicles lighter. Just recently, Ford launched a new truck called the F-150 in the US, which has got a very good response due to this high content. Other car makers are expected to follow. This will change the industry’s dynamics, as car weight will come down 500-700 pounds per vehicle. We expect the demand to grow for our products and, hence, invested close to $1.5 billion to expand capacity.
Hindalco profit down 23%
Aditya Birla Group’s Hindalco Industries announced a 23 per cent fall in its net profit on Thursday, at Rs 334 crore in the December 2013 quarter as compared to Rs 433 crore in the same period of last year. Its net sales in the quarter were up six per cent to Rs 7,200 crore, as compared to 6,789 crore in the same period of 2012-13. The company’s stock fell three per cent to Rs 100 a share after the results were announced.