Hindalco Industries Ltd., the flagship company of the Aditya Birla Group, has announced its consolidated and standalone audited financial results for the year ended 31 March 2009. Hindalco’s performance has been adversely affected by the global economic environment.
Net sales and revenues at Rs. 18,219 crore in FY 09 are lower as compared to Rs. 19,201.03 crore in FY 08. The steep reduction in copper LME led to a fall in the overall sales revenue; though the rupee depreciation against the USD partially mitigated the impact. Higher input costs and an unfavorable market mix (more sale of primary metal and increased exports) impaired profitability. EBIDTA is lower as compared to FY 09, even after factoring the benefit derived from higher metal production consequent to the Hirakud brownfield expansion, profit improvement measures and higher other income.
To reduce the strain on its profitability the company has initiated aggressive cost control measures and tighter working capital management besides re-aligning its capital expenditure across the businesses.
The turnover in the aluminium business grew by 6.4 per cent to Rs. 7,603.84 crore vis-à-vis Rs. 7,144.94 crore in the corresponding period in the previous year on the back of the highest ever metal volumes. However the lower LME and spiraling input costs squeezed the margin, coupled with the shrinkage in the domestic demand for value added products which have better margins. This in turn reduced the gains from a weaker rupee.
In the copper business, revenues stood at Rs. 10,624.5 crore lower by 12 per cent vis-à-vis Rs. 12,065 crore in FY08 as a result of the 21 per cent lower LME. The profit before interest and tax also fell by 25 per cent to Rs. 379.14 crore from Rs. 503.36 crore in the last year, mainly due to 37 per cent fall in TcRc and planned annual shut down.
The steep depreciation of the Indian Rupee against the US Dollar affected the copper business by an estimated Rs. 156.5 crore, as a result of restatement of net foreign currency exposures as on 31 March 2009. For the previous year, this amount was Rs. 41crore. Consequently, the PBIT of copper business is lower than the previous year by Rs.115.45 crore on this account.
Profit before tax at Rs. 2,690.32 crore in FY 2009 vs. Rs. 3,025.61 crore, 10.4 per cent fall, reflects superior performance of the company as compared to industry performance in the backdrop of economic downturn.
The adjustment for earlier year (net) under tax expenses reflects the write back of provision for tax resulting from a change in estimation of tax liability in progress in tax assessments.
Utkal Alumina is an alumina refinery coming up in Raygada, Orissa. The project consists of a 1.5 million tpa refinery, with a 90 MW cogen plant and a 2 million tpa bauxite mining facility. The construction of the refinery is currently in full swing. All the land required for the project has been acquired. Around 70 per cent of the project cost has already been committed. The mechanical completion of the plant is expected by January 2011 and the first alumina is slated for production around July 2011.
The Mahan Aluminium project coming up in Bargwan, MP, will have a smelter capacity of 359,000 tpa and a captive 900 MW power plant (6 x 150 MW). The land acquisition for the project will be completed in Q2 FY 10. All the major clearances have been obtained. Major orders have been placed for both the smelter and the power plant. BHEL has been given the order for the boiler – turbine – generator packages for the power plant. Orders for cranes, cathode blocks, rectifiers and substation for the smelter have also been placed. Nearly 40 per cent of the total project cost has been committed so far. The first metal from the smelter would roll out by July 2011.
Aditya Aluminium, is an integrated aluminium project coming up in Orissa, with a 1.5 million tpa alumina refinery, 359,000 tpa aluminium smelter, and 900 MW captive power plant. A large portion of the land required for the project has been acquired. Forest clearance for the rest of the land is under progress. Key clearances have been obtained. As is in the case of Mahan, a number of major orders have been placed for the smelter and power plant. The first metal from the smelter is slated for October 2011. The refinery should be mechanically completed by June 2013.
Jharkhand Aluminium is an aluminum smelter coming up in Sonahatu, Jharkhand, with a capacity of 359,000 tpa . A 900 MW captive power plant will also be a part of the project. The plant will be located in Sonahatu which is 20 kilometers from Muri and 55 kilometers from Ranchi. The land acquisition process has already started. The government of Jharkhand has given the water allocation clearance for 55 mcm of water from the Subernrekha basin. The tubed coal mine has been allotted jointly with Tata Power. The first metal from the smelter is expected by June 2013.
The consolidated revenue for the year is at Rs. 65,625 crore and PBIT at Rs. 627 crore. The result includes a non-cash unrealised derivative loss of around Rs. 2,381 crore (USD 519 million) which was only Rs. 12 crore (USD 3 million) last year. These derivatives are used to hedge exposures to aluminum, primarily related to customer fixed-price contracts, other commodities and currency. The magnitude of the mark-to-market loss on the company’s derivative portfolio primarily reflects the dramatic downward movement in the LME price of aluminum.
Aluminium business revenue is Rs. 54,306.42 crore and PBIT at Rs. (425.31) crore, while the copper stood at Rs.10,760.26 crore with a PBIT of Rs. 374.11 crore.
The company has formulated a scheme of financial restructuring to deal with various costs associated with its organic and inorganic growth plan. The recent economic downturn particularly in the commodity space is also expected to result in impairment / diminution in value of certain assets/ investments. Accordingly, as per a Scheme of Arrangement under sections 391 to 394 of the Companies Act 1956 ("the Scheme") between the company and its equity shareholders approved by the High Court of judicature of Bombay, a separate reserve account titled as Business Reconstruction Reserve ("BRR") has been created by transferring balance standing to the credit of Securities Premium Account of the company for adjustment of certain expenses as prescribed therein. Accordingly, Rs. 8,647 crore has been transferred to BRR and Rs. 67 crore in standalone accounts and Rs. 4616 crore in consolidated accounts have been adjusted against the same as per the Scheme during the year.
