Billionaire Kumar Mangalam Birla, chairman of Aditya Birla Group, listens during an interview in Mumbai (Photographer: Dhiraj Singh/Bloomberg)

Hindalco To Repay Rs 1,100-Crore Debt This Month: Kumar Mangalam Birla

Rising demand for aluminium has helped Hindalco Industries bring down its debt.

The company has prepaid Rs 7,815 crore till August and plans to clear another Rs 1,100 crore in September, Chairman Kumar Mangalam Birla said at the aluminium producer’s annual general meeting on Wednesday.

Going forward, we would continue to deleverage. We would save Rs 800 crore in terms of interest costs in FY18.
Kumar Mangalam Birla, Chairman, Hindalco Industries

As of March 2017, Hindalco’s borrowings stood at Rs 17,857 crore, according to its consolidated balance sheet. The company’s average finance costs is 7.8 percent, which Birla called “a very fine rate”.

Hindalco’s aluminium margin stood at 25 percent in the quarter ended June, Satish Pai, managing director, had told BloombergQuint earlier. Prices have rebounded this year to cross over $2,000 a metric tonne for the first time since 2014, according to Bloomberg.

The company’s new plants – Aditya, Mahan, and Utkal – are running at full capacity, Birla said. “This gives a boost and stability to the company.” Efforts are on to increase production at Utkal Alumina so that the additional metal can be exported, he said.

On their dependence on coal, Birla said the fossil fuel continues to be a large part of the company’s operating expense. “We are close to becoming 70 percent self-reliant as far as our coal requirements are concerned, which was 50 percent few years ago.”

Production touched 1.3 million tonne in the year through March, which was close to 100 percent capacity.

The company’s copper production took a hit due to a planned shutdown and operated at 90 percent capacity, he said. Since copper is linked to economic growth, the business is expected to grow at 6-7 percent in this financial year, said Birla. The strong growth in end user segments such as winding wires, power cables is a positive for copper business, he said.

Birla said they will shift their focus towards auto segment through Novelis, the Atlanta-based company that Hindalco acquired in 2010. Novelis makes aluminium sheets used in automobiles. “We expect the automotive aluminium market to grow significantly through the end of the decade, which has driven the investments made by Novelis in automotive sheet finishing capacity in north America, Europe, and Asia,”

Auto products contributed 18 percent of overall business of the company last financial year, compared to 15 percent the year before, he said.

Along with the focus on deleveraging, the aluminium producer will also concentrate on downstream operations such as building and construction and packaging products.

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