Aditya Birla Group’s metal flagship had reported a loss of Rs 709 crore in the first quarter last fiscal year and a net profit of Rs 1,928 crore in the January-March quarter.
Hindalco reported an operating profit (earnings before interest, tax, depreciation and amortisation) of Rs 6,790 crore, up 2.87 times from a year earlier. Consolidated revenue for the quarter ended June rose 64 per cent to Rs 41,358 crore.
“The improvement is visible across all our business segments where we are seeing strong demand, plants running at capacity, and better margins,” managing director Satish Pai said.
Novelis recorded its best-ever quarterly adjusted operating earnings of $555 million, up 119 per cent from a year earlier. Higher volumes, a favourable product mix and metal benefits and a $47 million gain related to a favourable decision in Brazilian tax litigation boosted numbers at the company that supplies aluminium sheets for automakers and other speciality products.
“Novelis has had a great quarter … they have managed to take care of the impact of the semiconductor shortage on auto (industry) by focusing more on cans and specialities segment. Going ahead, the semiconductor shortage too is likely to ease and Novelis will continue to do better,” Pai told ET.
Hindalco’s gross debt declined by Rs 16,345 crore and net debt by Rs 10,389 crore as of June 30, 2021. Its consolidated net debt to Ebitda was 2.36 times on June 30, compared with 3.83 a year earlier.
Hindalco’s aluminium business reported an operating profit of Rs 2,352 crore, compared with Rs 973 crores a year earlier. The business’ operating margin reached a 13-year high at 37.5 per cent. Production cost for aluminium rose 4 per cent in the past quarter and the company expects it to go up by 5 per cent in the ongoing quarter.
The copper business posted an operating profit of Rs Rs 261 crore, compared with Rs 66 crore a year earlier.
The integration of Aleris, the US-based aluminium rolls products maker that Novelis acquired in 2020, is ongoing well, the company said.
“When we did the acquisition, we guided around $150 million in synergies, which was around $85 million of administrative and supply chain synergies and $65 million to come from the China integration … however, now it is around $220 million,” Pai said.
The company has planned a capital expenditure of Rs 2,700 crore this financial year and aims to invest close to Rs 10,000 crore in the next five years at its Hirakud, Silvassa and Mundra plants. While announcing the results, the company said its board approved a downstream flat-rolled project at its existing facilities at Hirakud in Odisha. The total investment for the project is about Rs. 3,000 crore, which is part of the Rs 10,000 crore investment planned, for a production capacity of 170 kilotonnes (kt) a year.
“With the planned investments, we expect our downstream value-added capacities to reach around 450 kt in the next 2-3 years from 300 kt presently. At the end of 5 years, it should be around 600-700 kt. In the longer term, we want to get into a million tonnes,” Pai said.
Apart from the planned Rs 10,000 crore of investment in aluminium, there will also be an investment in the copper business.
Besides a normal maintenance Capex of $300 million, Novelis will spend about $1.5-2 billion over the next 5 years.
“As part of the integration (of Aleris with Novelis), an expansion project in Zhenjiang, China, is expected to begin in the current year with investments of $375 million over 3 years. This includes a new cold mill, automotive casting house, recycling capabilities and hot mill upgrade,” Pai said.
