Hindalco Industries (HINDALCO) Q4 96/97 earnings summary

Executive summary

• FY97 performance was pressured by a grid-related smelter disruption, planned mill shutdowns, depressed aluminium prices and higher input and transport costs.

• The Rs. 17,500 million expansion and modernisation programme advanced substantially; almost all activities were scheduled for completion in FY98.

• Higher exports, strong power-plant efficiency and upgraded fabrication facilities provided support for the next phase of growth.

Financial highlights

• Net sales fell to Rs. 11,570.76 million from Rs. 12,518.07 million in FY96; profit before tax was Rs. 5,104.53 million versus Rs. 6,411.46 million.

• Net income was Rs. 3,909.53 million, down from Rs. 4,011.46 million; operating profit was Rs. 4,266.11 million versus Rs. 5,611.10 million.

• Exports rose 48% to Rs. 1,565.54 million from Rs. 1,054.45 million, despite lower metal and rolled-product output and falling international prices.

• The board recommended a 45% dividend, or Rs. 4.50 per share, on the expanded equity base following the 1-for-2 bonus issue.

Outlook and guidance

• Sales were expected to improve in FY98 with higher metal output, refurbished rolling mills and higher prices.

• Additional Renusagar generation units were scheduled for the second half of FY98, raising capacity to 575 MW; expanded smelting capacity of 242,000 MTPA was expected by March 1998.

• Alumina capacity expansion from 350,000 to 450,000 MTPA was scheduled for commissioning by mid-FY98; added rolled-product capacity was to ramp up progressively.

• The Silvassa foil project was scheduled for commissioning in the latter half of FY98; Aditya Aluminium remained under feasibility evaluation.