Hindalco March quarter net more than doubles

Net sales slip 7.3% as realisations drop on lower metal prices and declining premiums

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Hindalco Industries’ standalone bottom line more than doubled to Rs 356 crore in the March quarter, up 123.3 per cent year-on-year, mainly because of lower input costs as net sales took a hit due to falling aluminium and copper prices.

Net sales of the Aditya Birla Group company stood at Rs 8,542 crore in the period under review, down 7.33 per cent from same quarter last year as realisations dropped with average fall in aluminium and copper prices on London Metal Exchange (LME) at 16 per cent and 20 per cent respectively.

According to Bloomberg estimates, Hindalco’s net profit was seen at Rs 51.4 crore, while top line was expected to be at Rs 8,501 crore.

“The low cost of raw materials, especially energy inputs, was a major relief during the quarter,” the company stated. The company’s total expenses slipped 11 per cent in the quarter gone by to Rs 7,842 crore, lending support to the operating profit which moved up 35 per cent on a year-on-year basis to Rs 825 crore.

In aluminium business, the impact was much severe due to a sharp fall in the local market premium, which declined by around 75 per cent and sharp surge of aluminium imports in the country, said the company in its release.

However, a strong increase in aluminium volumes following the increased production and thrust on value addition across businesses helped the company offset the impact of sharp fall in realisations, it said. Weak rupee also came to the rescue of the top line as it helped further offset the impact of declining LME prices.

Due to this, Hindalco’s earnings before interest and tax (EBIT) increased 69 per cent on year-on-year basis to Rs 517 crore. The company upped its alumina production by 11 per cent to 703,000 tonnes.

In copper, despite all the initiatives for value maximisation, the EBIT fell 6 per cent on year-on-year basis to Rs 377 crore, primarily on account of the abolition of certain export incentive scheme during the year and challenging market conditions.

“While the macroeconomic headwinds persist, the uncertain global macros pose several challenges, the company in the meanwhile, continues with its un-relented focus on operational excellence, enhanced value addition and cash conservation to tide over these circumstances,” said Hindalco Industries.

Satish Pai appointed MD

At a board meeting on Saturday, Hindalco Industries appointed Satish Pai, currently deputy managing director, as the managing director. “D Bhattacharya, will be demitting office as managing director with effect from 31 July 2016,” India’s biggest aluminium manufacturer said in a statement to BSE. Bhattacharya will continue as non-executive director and has also been appointed vice-chairman. Chief Financial Officer Praveen Kumar Maheshwari has been inducted as the whole-time director on the board of the company for a five-year term.