What is the outlook for FY19?
Aluminium demand has really picked up in the last four months. The government is very focused on getting many infrastructure projects done, which for sectors like metals is good news. I am more worried about whether there is going to be a big spike in imports because Chinese metal has got duties in the US, Russian metal cannot got to the US, Middle Eastern metal has got duties in the US, so whether they are all going to try and dump in India.
Are you looking to address this with the government?
Yes, we are discussing this to see if there can be quantitative restrictions put to at least limit the imports to a certain level compared with the last few years.
How have the imports of aluminium been?
In the last year, 2017-2018, imports became 54%, so it went up by another 2% compared with the previous year. India’s aluminium production is about 3.5 million tonne and consumption is 3.5 million tonne, but we are importing more than 50% and exporting our aluminium, which doesn’t make sense.
Why are the imports high? Is it because there is some demand that we cannot meet or is it the cheaper price?
Some part of alloy demand, one can say, we cannot meet. But what is happening is that a huge amount of scrap is coming into India. Of the 1.9 million tonne imported last year, 1.1 million was scrap. China has put duty on their scrap, but scrap is sold at discount to aluminium, so a lot of people are importing scrap and using that for alloying for auto, which is legitimate, but also going into wire, which is not good, into vessels used at lower levels, which is not good.
What is the outlook for aluminium prices in FY19?
Aluminium today is at $2,300, and should be in the $2,200-2,300 range. So we should be seeing a stable aluminium regime.
Copper is throwing some challenges. Ebitda is down to `329 crore in Q4FY18?
Copper performance was low in Q4. That is because TC/RC since Calendar Year 2018 is down 11%. We had operational shutdowns in the phosphoric acid plant, so we could sell only 50% of our normal volumes, but that has got fixed. So it was just a quarter where they had a couple of issues. Going forward, they should be OK. We have a shutdown planned in Q1, but for the year we should be fine.
What is the outlook on commodity prices?
We think costs are topped out and we have guided that we are going to be at Q4 levels for the next few quarters now. We hope caustic soda and carbon prices go down further.
With the surge in demand, we see some steel companies revising capex guidance. What about you?
We are going to spend Rs 1,600 crore in capex versus Rs 1,100 crore last year, which is going into brownfield Utkal expansion and the downstream opportunities. Over the next five years Rs 5,000-6,000 crore will be on growth opportunities over and above our maintenance capex, roughly around Rs 800 crore a year.
Could you explain why we are considering Hindalco standalone plus Utkal in the earnings?
Hindalco standalone is without Utkal. However, all the Utkal alumina goes into my aluminium business. So as the alumina prices in the market goes up, the alumina profit gets into Utkal, which is part of Hindalco. So to present a comprehensive view of the business, we have started to report Hindalco standalone plus Utkal. So it is important to note that the PAT of Q4FY18 is up 13% y-o-y and not 25% down as is being made out. However, for Sebi we still have to give the Hindalco standalone, which is the listed entity.