The operational performance at Hindalco has been amongst the best ever with highest production of both Aluminium and Copper. However, the impact of sharp fall in sales realization in Aluminium business and lower by-product credits in Copper business have adversely impacted the performance by around Rs. 900 crores.
Net Sales and operating revenue were lower at Rs.4917 crores for Q2FY10 due to subdued commodity prices. The steep reduction in aluminium and copper
LME led to a fall in the overall sales revenue and therefore profitability. The benefits of the brownfield expansion cushioned the fall due to lower commodity prices. The decline was also mitigated by the rupee depreciation against the USD and higher sales volume. The other income including treasury income is lower by Rs. 119 crores on account of lower treasury corpus post utilisation for repayment of bridge loan in Nov-08. Consequently the profit before Depreciation, Interest and tax was also lower at Rs. 666 crores and Net profit was at Rs. 344 crores.
Of the total revenues of Rs. 4,917 crores, aluminium business contributed Rs. 1,650 crores with EBIT of Rs. 259 crores. The 35 per cent fall in
LME over Q2FY09 levels dented the top line and the bottom-line. This was partially offset through gains from a weaker rupee, higher volumes and improved product/geographic mix. Lower Sales realisations account for around Rs. 550 crores of the drop in the operating profit. The purchase cost of coal has increased steeply impacting the margin. These macro economic factors led to 64 per cent drop in the profit before interest and tax for aluminium business from Rs. 715 crores in Q2FY09. In the copper business, revenues declined by 8% from Rs. 3,565 crores in Q2FY09 to Rs. 3,269 mainly on account of lower copper
LME. Copper being a custom smelting operation with offset hedging program is relatively insulated from the vagaries of volatile commodity prices. However lower by-product credit has dented the EBIT by Rs. 350 crore
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