Its net profit increased from Rs 272.8 crore to Rs 299.2 crore, while net sales showed a 15 per cent growth from Rs 866.3 crore to Rs 994.1 crore.

Gross profit was higher by 16 per cent, while operating profit margin remained flat at 45.3 per cent against 45.2 per cent last year.

Hindalco president Askaran Agarwala said that the relatively lower increase in net profit has been on account of higher taxation and depreciation cover.

Agarwala said that the outlook for the second half was better as prices have already been increased twice, in July and in October, and the Rs 8,000 per tonne differential between domestic and landed price leaves room for further price revisions. This, he said, would depend on whether international prices rise further.

Expenditure in the first half increased from Rs 473.5 crore to Rs 543.4 crore, while the tax liability shot up from Rs 80 crore to Rs 115.5 crore during the period.

Depreciation was also higher at Rs 66.7 crore against Rs 59.5 crore in the same period last year. The company has been able to reduce its interest charges to Rs 32.1 crore compared with Rs 45.3 crore last year.

Hindalco's joint president (finance) RK Kasliwal said that the company had gone for a interest swaps last year which has begun to take effect in the current financial year.

Hindalco has also increased its target output for most of the semi-fabricated products by 10-15 per cent for the full year. Agarwala said this was part of an effort to improve the company's margins through production of more value-added products.

He said that over the next two years, the contribution of value-added products would go up to 61 per cent from 49 per cent to the total turnover.

The company produced aluminium at more than 100 per cent capacity utilisation in the first half. Agarwala said it was targeting a total annual production of 246,000 tonne against an installed capacity of 242,000 tonnes.

Kasliwal said: "The planned increased production in the second half, coupled with improved realisations make the second half outlook far better."

In September, the company commissioned its 3 lakh unit capacity aluminium wheel plant, and hopes to sell 20,000 units by the end of the current fiscal.

Agarwala said that the final decision on a Rs 2,300-crore brownfield expansion at Renukoot, Uttar Pradesh will be taken within the next two months.

INSIGHT:

Focus on value-added items to pay off

Despite the fact that Nalco, which was practically absent from the aluminium markets in the previous year, came back with a vengeance, Hindalco has managed to record an increase in both its sales and profits during the first half of the year. One need not, however, be taken in by the company's higher exports during the period. With better supply in the domestic markets, there was little option but to export. Yet, there is no denying that the company has managed to improve on its already high margins. Its focus on higher value-added products should enable the company to show a further improvement in profitability in the following quarters.

-- Sarad Saraf