Net profit zoomed to Rs 273 crore, up from Rs 230 crore a year ago, while operating profit spurted 40.7 per cent from Rs 277 crore to Rs 390 crore during the period. Gross profit rose over 35 per cent to Rs 413 crore, compared with Rs 304 crore a year ago.

Net sales shot up form Rs 698 crore to Rs 863 crore, up 23.7 per cent.

Hindalco president Askaran Agarwal said: "The improved performance is all the more impressive as it has been achieved at a time when global aluminium prices have touched record lows. The company is well positioned to attain increased growth in revenues and earnings in an increasingly globalising India".

Net profit during the second quarter increased to Rs 147.8 crore from Rs 139.4 crore in the corresponding quarter last year, while net sales improved to Rs 445.6 crore from Rs 396 crore. Operating margins inched upto 45.2 per cent, an increase of 5.4 per cent over the same period last year.

Total expenditure at Rs 474 crore increased 12.5 per cent over the same period last year. Interest costs rose to Rs 45 crore from Rs 35 crore, while depreciation shot up to Rs 60 crore from Rs 36 crore in the corresponding period last year.

Metal production during the first half at 1,18,558 tonnes registered a 24.21 per cent jump over last year, while output of rolled products grew 58.9 per cent to 20,379 tonnes. Hindalco is the largest metal producer with a whopping 44 per cent market share.

Production of wire-rods increased 8.8 per cent, while the extrusions output recorded a marginal increase over the same period last year. Even the alumina output increased 20.4 per cent to 2,04,025 tonnes during the first half this year.

The company's capital expenditure in the first half was Rs 100 crore, which will go up to Rs 150 crore in the second half. Hindalco, which is setting up an aluminium alloy wheel plant at Silvassa, plansto commission the project in the first quarter of the next financial year. The company is also planning to set up a can-making facility, which will require an investment of around Rs 200 crore.

INSIGHT

Volumes shore up show: Despite soft aluminium prices, Hindalco has managed to post an impressive 23.7 per cent jump in its turnover to Rs 863.4 crore. Thanks largely to a volume-led growth of 14 per cent.

Soft prices have also caused the Asian premiums for the metal to drift downwards. Though aluminium firms could not raise prices, Hindalco survived the downturn owing to its low cost of production. The second factor that contributed to the bounty for Hindalco was the snag in Nalco's production line, since early May. Out of Nalco's 300 pots, nearly 100 failed. This resulted in a production cut for more than a month and a sudden shortage of the metal in the domestic market. Hindalco's volumes were further driven by the 4 per cent import duty hike, which led to increased replacementdemand.

The company also reaped the rewards of capacity additions in 1997-98. All of which has helped the company boost margins. Operating margins for the six months ended September, 1998, improved from 39.71 per cent to 45.16 per cent.

Hindalco should be able to maintain its margins owing to its range of value- added products. The firming up of aluminium prices should also give the company the leverage to hike the prices.