26 January
MUMBAI,
Press Release

Hindalco Industries Ltd, an Aditya Birla Group company, today announced its unaudited financial results for the third quarter ended December 31, 2009. With a 5% higher aluminium metal production, a 34% increase in the rolled aluminium production and a 22% higher Copper production, compared to Q3 FY09, the quarter has been amongst the best ever.

Q3 FY10 results
Net sales at Rs.5315 crore were up 29% on higher metal volumes and better copper realisation. The capacity increases through the brownfield expansion have resulted in higher production as well as lower costs. However EBIDTA is lower by 4% at Rs.748 crore mainly on account of lower by-product credit in the Copper Business of Rs.100 crore and higher coal cost of Rs.50 crore. The net profit has fallen due to lower other income at Rs.50 crore vis-à-vis Rs.150 crore in Q3FY09. This is on account of lower treasury corpus post repayment of the bridge loan taken for acquisition of the Novelis. The net profit for the quarter stood at Rs.427 crore.

On a sequential basis, sales are up by 8% over Q2FY10 and EBITDA is up by 23% mainly on back of higher volumes, better efficiencies and improving commodity prices offset partially by impact of stronger rupee in both businesses and lower TcRc in copper business.

Nine months results
For the nine months ended 31 December 2009, net sales at Rs.14,132 crore were lower by 2% despite higher metal volumes due to subdued commodity prices. Net profit is also lower by 36% at Rs.1252 crore. Rs.1700 crore were lost only on account of lower realisation of aluminium and by-product credits in copper. When viewed against this backdrop, the performance is commendable. The other income was lower by Rs.360 crore on account of low treasury corpus post repayment of bridge loan taken for Novelis acquisition.

Operational review

Of the total revenues of Rs.5,315 crore, aluminium business contributed Rs.1,885 crore with EBIT of Rs.438 crore. The benefits of higher volume, improved geographic / product mix and higher LME were partially offset by impact of stronger rupee and increase in coal prices. The purchase cost of coal has increased steeply, impacting the margin. These macro economic factors led to 17% drop in the profit before interest and tax for aluminium business from Rs.530 crore in Q3FY09.

The expansion at Muri and Hirakud has resulted in a 50% rise in alumina production at Muri and metal production by 12% at Hirakud. Metal production is up 5%. The wire rod production is also higher by 25%.

The downstream production rose by 34% and 39% each in case of flat rolled products and extrusion products respectively.

Brownfield expansion projects
Hirakud: The smelter expansion from 143ktpa to 155 ktpa has been completed on time. Work on the smelter expansion from 155ktpa to 213ktpa is now underway, part of this (155 to 161 KTPA) will be completed by July 2010. The rest will be commissioned in FY12. Site activities like boundary wall, area grading etc. are progressing well.

A project is underway for transfer of all key equipments for flat rolled products, from the Novelis plant at Rogerstone, UK to Hirakud. This will enable us to produce can body stock for local and export market. The project is slated for completion in Q2 FY12. Project activities including dismantling and refurbishment of equipments have started.

Belgaum: Special alumina production from Belgaum will be ramped up to 316 ktpa from 138 ktpa. To reduce cost of production substantially, a 18 MW co-gen power plant and a railway siding facility will also be taken up as a part of the project.

Mouda: A captive power plant of 20MW is proposed at the existing Mouda plant at Nagpur to reduce the cost of energy used by the company’s plants in Maharashtra. The environment study is completed and the detailed project report is ready. Work on pre project activities and statutory clearances are going on.

Greenfield projects
Utkal Alumina project: Construction of 1.5 Mio TPA alumina refinery at Rayagada, Orissa is in full swing. Engineering for refinery and CPP is nearing completion. Contractors are working at site for civil, fabrication and erection and have mobilised manpower at site. Orders for all the long delivery equipments placed and around 75 per cent of the project cost has already been committed. Major equipment like boilers, evaporators, turbines begun arriving at site and erection has started in some areas. Production of alumina is expected to start around July 2011.

Mahan Aluminium project: It is an aluminium smelter of capacity 3.59 lakh TPA and a captive 900 MW power plant coming up in Bargwan, MP.

All the major approvals are in place and site activities are progressing well. Major contractors have been mobilised at site. Work on site grading, boundary wall, boiler and TG foundation is progressing on full swing. Orders for major long delivery equipments have been placed for both the smelter and the power plant. Around 67% of the total project cost has been committed. The first metal from the smelter would roll out by July 2011.

Aditya Aluminium project: The integrated aluminium project is coming up in Orissa, with a 1.5 million TPA alumina refinery, 359,000 TPA aluminium smelter, and 900 MW captive power plant.

All the major approvals are in place. Major orders have been placed for both the smelter and the power plant. Around 53% of the total project cost for smelter and power plant has been committed. The first metal from the smelter is slated for October 2011. The refinery would be mechanically completed by June 2013.

Jharkhand Aluminium project: It is an aluminium smelter coming up in Sonahatu, Jharkhand, with a capacity of 3.59 lakh TPA and 900 MW captive power plant. The land acquisition process has commenced. Activities for getting the environmental clearance have also started. The company has made a presentation to the MOEF expert committee. The tubed coal mine has been allotted jointly with Tata Power. The first metal from the smelter is expected by June 2013.

Industry outlook — Aluminium
Global aluminium demand increased 13% in Q3 FY10 over the comparable period in the previous year. This can be attributed to the sharp rise in Chinese demand and the low base effect, even as the non-Chinese consumption continued to contract over the year-ago level. Non-Chinese consumption was, however, 6% higher in Q3 FY10 over Q2 FY10. Across most economies, aluminium demand is improving from the severe crash seen during the downturn.

India has continued to grow very well and the Q3 growth was one of the highest in the world. At the end of December, LME stocks were 4.6 million tons staying at around the same level as they have in the last few months.

Demand in India continues to be strong especially in the electrical and transportation sectors.  In the last quarter, building and construction demand has also picked up.