Hindalco's performance may be affected in near term due to a sharp slide in realisations in aluminium industry, its chairman Kumar Mangalam Birla said here today.
Addressing shareholders at the company's 56th annual general meeting (AGM), Birla also predicted a "significant impact" on the financial performance of the company from FY16 onwards as interest and depreciation flow through the P&L statement following the full ramp-up of the projects.
"The commodity markets, and in particular the aluminium industry, are going through a challenging phase at present because of the sharp slide in realisations. This would impact Hindalco's performance in the near term," Birla said.
The de-allocation of coal blocks by the Supreme Court last year was a disruptive change in the business environment for its aluminium business, Birla said.
"Our expansion strategy was closely hinged on to the coal blocks allocated by the government. In the changed scenario, Hindalco participated in the fiercely competitive auctions of coal blocks and managed to bag four coal blocks, securitising approximately 25 per cent of its total coal requirement," Birla added.
He said the short-term outlook for domestic aluminium business would be testing.
In the coming years, the focus will continue to be on operational excellence and increasing the productivity of new assets, Birla added.
He pointed out that with the addition of world-class assets in the recent years, the company is, however, well poised to ride the structural growth trends such as increasing urbanisation, light-weighting of vehicles and growth in emerging markets.
Birla said the company has a strong business portfolio comprising the de-risked copper business coupled with the technologically intensive portfolio of Novelis.
Along with this, its focused approach, would go a long way in ensuring a robust future.
