Kumar Mangalam Birla says near-term outlook for aluminium ops “testing”; higher depreciation, interest costs to impact results
Mumbai : Sharp slide in realisations in aluminium industry, higher depreciation and interest costs will continue to weigh on the financial performance of Hindalco Industries Ltd, Kumar Mangalam Birla, chairman of Hindalco said while addressing shareholders at the company’s 56th annual general meeting (AGM).
“The commodity markets, and in particular the aluminium industry, are going through a challenging phase at present because of the sharp slide in realizations. This would impact Hindalco’s performance in the near term,” the release quoted Birla as saying.
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.
In the quarter ended June, the company’s net profit plunged 67.3% year-on-year to 1.1 bln rupees as depreciation and interest cost rose due to the commissioning of new manufacturing units.
Birla said the company has a strong business portfolio comprising the de-risked copper business coupled with the technologically intensive portfolio of Novelis.
Birla pointed out that the average aluminium LME(London Metal Exchange) price was around 6 per cent higher than FY’14 whereas copper LME price was 8 per cent lower than the previous year, driven by the slowdown in the Chinese demand growth and higher mining output.
Shares of Hindalco ended up 1.3% at 77.25 rupees on the National Stock Exchange.