Hindalco Industries, the country's largest aluminium producer, will soon meet its pre-payment target of Rs 9,000 crore for the current fiscal. Having already prepaid a total of Rs 7,850 crore so far this year and with another Rs 1,100 crore to be paid in advance later this month, the Aditya Birla Group company is almost there in terms of achieving its prepayment target of Rs 9,000 crore for the current financial year.
"The effort to deleverage the balance sheet via cash flows and QIP (Qualified Institutional Placement) is a significant feature in the performance of Hindalco Industries and going ahead the interest cost is seen coming down," chairman Kumar Mangalam Birla said in response to shareholders questions here today. He was speaking at the 58th annual general meeting of the company. For the current financial year, deleveraging will save Rs 800 crore of interest cost for Hindalco.
Due to capex plans for its Utkal alumina refinery and Aditya smelter, the company's balance sheet had been heavy and deleveraging since then has been an area of priority for the company.
The company has registered a record consolidated EBITDA at Rs 13,547 crore on a turnover of Rs 102,631 crore in the year ended March. Both aluminium and copper businesses in India and Novelis registered robust operational performance during the year, said the chairman in his address speech.
"The company's focus has been to deleverage the balance sheet and this will continue in the coming year as well," informed Birla. At present, the company bears an average finance cost of 7.8 percent.
Going ahead, Hindalco will focus on downstream projects and increase production in this space of business. The company is also studying the proposition to export surplus alumina produced at its Utkal refinery which will only add to the earnings.
Kumar Mangalam Birla also told the shareholders that the company is well-equipped to make electric vehicles in the domestic market and also has an arrangement with a supplier for auto parts of the same.
On business outlook, Birla said: "Domestic demand for aluminium in India is expected to benefit from the infrastructure projects prioritized by the government. The government thrust on power sector augurs well for your company. The power sector is the dominant consumer of aluminium in India. Other segments expected to see higher demand are the automobile and food packaging industries. Additionally, rapid urbanisation should augment consumer demand. It will help sustain aluminium growth in India. The per capita aluminium consumption in India is still below the global average. So there is a huge potential for higher consumption, given our demographic and economic outlook. The domestic copper demand is led by the electrical and electronic products sector. They account for 34 percent of total domestic copper consumption. A strong growth in end user segments such as winding wires, power cables and other user applications further bolsters it."