>HINDALCO (SMC)

Performance for the quarter ended December 2009
For Q3 FY10, the standalone net revenue of Hindalco increased 29% Y-o-Y and 8% sequentially on the back of higher metal volumes and better copper realisation. The capacity increases through the brown-field expansion have resulted in higher production as well as lower costs. However, the OPM was down 480 bps to 14.1% and the operating profit was down 4% Y-o-Y mainly on account of lower by-product credit in the copper business of Rs 100 crore and higher coal cost of Rs 50 crore. However, sequentially the operating profit was up 23%.

The revenue in aluminium business was lower 5% Y-o-Y at Rs 1885 crore with 17% lower PBIT at Rs 438 crore. The benefits of higher volume, improved geographic/ product mix and higher LME were partially offset by impact of stronger Rupee and increase in coal prices. The purchase cost of coal has increased steeply, impacting the margin.

In the copper business, revenues increased by 60% to Rs 3432 crore mainly on account of higher copper LME. The benefits of the marked improvement in operational efficiencies including energy efficiency were partially offset by lower by-product credit due to lower sulphuric acid realisation and fertilizer subsidy. These factors led to a PBIT of Rs 159 crore, 38% higher Y-o-Y.

With lower other income at Rs 50 crore on account of lower treasury corpus post repayment of the bridge loan taken for acquisition of the Novelis against Rs 150 crore in Q3 FY09, along with 22% lower interest cost at Rs 72.94 crore and higher effective tax rate (increased 400 bps to 23.3% while absolute tax expenses were flat at Rs 129.52 crore), the PAT ended 22% lower Yo- Y at Rs 427.10 crore. However, sequentially the PAT was up 24%.

With adoption of AS-30 on financial instruments relating to derivatives accounting, net gain / (loss) Rs (159) crore, Rs 110 crore and Rs (8) crore for the quarter ended December 2009 has been included under Net Sales, Consumption of Raw Materials and Other Expenditure, respectively.

To read the full report: HINDALCO