Hindalco Industries, the metal flagship company of the Aditya Birla Group, expects demand for copper and aluminium to rise for the next few quarters as raw material prices, including that of coal, are expected to slide. The firm is also sticking to its earlier capital expenditure guidance for FY24, a top official said.
Separately, the company posted a consolidated net profit of Rs 2,454 crore for the quarter ended June, down 40.42%, impacted by lower volumes and fall in realisations. It had posted a net profit of Rs 4,119 crore a year ago. The company’s revenue from operations dipped 7% to Rs 52,991 crore from Rs 58,018 crore posted a year ago.
“We are quite confident of the next few quarters as we expect demand, both globally and domestically, to rise. Domestically, both aluminium and copper are now at record demand, so domestic demand is extremely strong both for the metals,” Hindalco Industries MD Satish Pai said in a post-earnings call.
The aluminium prices are expected to be in the range of about Rs 2,100-2,300 per tonne due to uncertainty in the Chinese economy, from about Rs 2,900 per tonne. Further, a fall in cost of production, which fell by 2% in this quarter from the March quarter, would also bring in additional benefits. It is expected to fall further by 3% in next quarter, and with moderating of coal prices.
However, the worries over China continues, he said, adding this could lead to more exports by that country.
Hindalco Industries, which had tied up with Tata Motors to build the first-ever all-aluminium cargo body for the new-generation Tata Ace EVs, is also in talks with 2-3 other vehicle manufacturers. He, however, declined to name them.
The production capacity will not be a constraint even if there is an increase in orders. The company has already supplied 1,000 cargo bodies to Tata Motors and it will deliver 300 bodies a month going ahead.
The capex plans are on track, he said, adding Hindalco looks to set up a greenfield aluminium manufacturing plant of one million tonne per annum in Odisha, and is in talks to secure a bauxite mine.
The company intends to spend about Rs 5,000 crore in capex each for global and domestic operations in FY24, while a major portion of it is being earmarked for expansion of Sambalpur rolling mill and aluminium extrusion plant in Silvassa.
It had also won a couple of coal mines and bagged the Meenakshi West block in Odisha with reserves of 950 million tonne. This will lead to a reduced buying from Coal India.
While the fall in net profit for the quarter was on account of “unfavorable macros and subdued volumes”, there were recoveries in Novelis and Aluminium India downstream business. This was backed by a steady performance by the copper business.
The company pared gross debt to Rs 57,382 crore (Rs 64,023 crore) and net debt to Rs 38,463 crore (Rs 42,193 crore).