Hindalco Industries Limited announced its unaudited financial results for the Q4 ended March 31st 2011. Its performance in the quarter has been significantly better than the comparable quarter in the previous year.
Q4 FY11 Results
Net sales at INR 6,846 crore in Q4 FY11 were up 27% over Q4 FY10. Better geographic and product mix along with higher LME and better copper volume have been the main performance drivers. The adverse impact of rupee appreciation, higher coal and carbon cost and lower TcRc were largely compensated by improved operating efficiencies and higher value added by product credit in Copper Business. Other Income was higher by INR 27 crore on the back of improved treasury yield and larger corpus, post return of capital from Novelis.
Employment cost rose by around INR 60 crore mainly due to one time costs arising on actuarial provisioning of retrial funds and long term wage settlement at some plant locations. EBITDA in excess of INR 1,000 crore despite steep input cost escalations and fall in TcRc was driven by better realization, improved mix and volume improvements from asset sweating and recent Brownfield expansions. Profit before tax is higher by 17% at INR 787 crore. Net profit after tax but before tax adjustment for earlier years is at INR 697 crore against INR 551 crore in Q4 FY10.
Business Segment Results
Of the total quarterly revenues of INR 6,846 crore, Aluminum Business contributed INR 2,211 crore with an EBIT of INR 562 crore compared to INR 614 crore in Q4FY10. The results would have been better but for increased input costs appreciating rupee and other one timers.
In the Copper Business, revenues for the quarter were higher at INR 4,637 crore up by 38% from INR 3,361 crore in Q4FY10 mainly on account of higher volume higher copper LME and by product credits. The benefits of the marked improvement in operational efficiencies were partially offset by lower TcRc and energy cost. Despite these factors, EBIT of INR 206 crore was 61% higher over corresponding quarter of the previous year.
Revenues for the year cross the USD 5 billion mark
For the year ended March 31st 2011 net sales at INR 23,859 crore grew by 22%. Highest ever copper volumes, better product and geographic mix, by product credit and higher realization on account of higher commodity prices impacted the company’s performance in a positive way. Input cost pressure, lower TcRc and one timers associated with Hirakud disruption constrained the superior operational performance.
Other Income at INR 317 crore was higher on account of better yields and higher treasury corpus post return of capital by Novelis. Interest was lower due to lower working capital borrowing coupled with lower international interest rates.
Directors
Mr Ram Charan has been appointed as an Additional Director on the Board of the Company. Mr Ram Charan, a Harvard Business School graduate has also earned an engineering degree, MBA and doctorate degrees. A highly acclaimed business advisor and author of management books, he has also served on the Harvard Business School faculty. He is a globally renowned consultant to several prominent CEOs of some of the world’s largest and most credible companies.
Mr Jagdish Khattar has been appointed as an Independent Director on the Board of the Company. Mr Khattar started his career as an IAS officer. He had been the CEO and MD of Maruti Suzuki India Limited till December 2007.
Mahan Financial Closure
The Company is setting up a Greenfield Aluminum Smelter Project in Madhya Pradesh with a capacity of 359,000 TPA of aluminum supported by 900 MW captive power plant at a cost of INR 10,500 crore.
The Company has successfully achieved the financial closure of Mahan Project with the signing of Common Rupee Loan Agreement for INR 7,875 crore on March 30th 2011. This constitutes the entire debt requirement of the Project. The facility has a door to door tenor of 12.75 years. SBI Capital Markets Limited, Citi Bank NA, The Royal Bank of Scotland NV and Kotak Mahindra Bank Limited acted as Mandated Lead Arrangers and thirty one bank insurance companies participated in the syndication.
