Aluminium major Indian Aluminium Company Ltd (Indal) yesterday unveiled its first half results which showed a hefty 41 per cent dip in its net profits to Rs 22.54 crore, from Rs 38.21 crore in the corresponding period of the previous year. Indal said its performance took a beating mainly owing to a sharp increase in costs due to escalation in customs duty on metal and aluminium melting scrap, and power cuts and labour unrest at its Kerala complex.
In the current half year, its net sales and operating revenue also dipped to Rs 485.09 crore from Rs 494.60 crore.
Indal has declared an interim dividend of 15 per cent for 1997-98, that is Rs 1.50 on every share of Rs 10. The company had provided minimum alternate tax under the Income Tax Act, 1961.
According to a company statement, during the six months under review, industrial unrest in protest against changes in work norms and power cuts at Kerala complex reduced profits by about Rs 12.50 crore.
During 1996-97, Indal saw a 48 per cent decline in profits. Its foreign partner, Alcan, is also reported to be keen on acquiring a 51 per cent stakeholding in the company.
This year, anticipating higher metal prices in 1998 and 1999, Indal chose to step up the maintenance of its Hirakud power plant steam turbine. This added Rs 4.6 crore to costs, while increases in the administered prices of power, fuel and freight led to Rs 8.3 crore of additional costs.
Indal is also working on plans to modernise and double the current 30,000 tonne capacity of its Hirakud smelter .
To ensure availability of adequate metal, Indal is currently pursuing a naphtha-based captive power plant for the Belgaum smelter with a capacity of 100 MW on a build- own-operate-transfer basis.
While world alumina prices remained stable in the first half of 1997-98, fall in demand for sheet, extrusion and foil squeezed the margins of the aluminium major. Moreover, as customs duty had been doubled to 20 per cent, domestic metal is today only available at a substantial mark-up to the London Metal Exchange (LME).
It will be focusing on cost reduction in the next six months. The company also hopes to improve its performance expecting the alumina prices to be firm. It wants the government of India to reduce customs duty on aluminium melting scrap for recycling and also import duty on metal to make it available to domestic users at a level comparable to the LME.