The Aditya Birla Group's Flagship Company
Q4, FY 2001-02
Sales Rs 647.7 crores Up 8.3%
Profit before Deferred Tx Rs 214.2 crores Up 36.6%
Net Profit Rs 192.2 crores Up 26.5%
Divdend 135% Up 12.5%
Hindalco Industries Limited, the flagship company of the Aditya Birla Group has recorded an impressive performance during the 4th quarter - January to March - Fiscal 2001-02. The company's sales have grown substantially despite adverse market conditions that have exerted considerable pressure on prices. The sales growth was made feasible with the aggressive marketing of larger volume, with a growing share of value added products. Even as Operating Margins have been under pressure on account of escalating input costs and intense competition, Hindalco, with larger volumes and higher other income, has grown Net Profits substantially - a remarkable achievement given the business environment.
The Company's performance in Q4, 2001-02 has contributed substantially to the satisfactory results for fiscal 2001-02.
Net Sales during Q4, Fiscal 2002 have grown 8.3% in comparison to the corresponding period of Fiscal 2001. The growth which is volume driven, is commendable.
Profits before Deferred Tax during Q4 of the current fiscal were Rs 214.2 crores, an increase of as much as 37% over profits in corresponding Quarter of the last Fiscal. The company has provided an amount of Rs 22.0 crores for Deferred Tax vis-à-vis a provision of Rs 4.9 crores for corresponding Quarter last year.
Following this higher provision, the company has recorded a net profit of Rs 192.2 crores in Q4, Fiscal 2002,a good 27% higher over profits of Rs 151.9 crores in the corresponding Quarter last year.
The Directors have recommended a dividend of Rs. 13.50 per equity which will be paid in line with the applicable regulations. The total outgo on account of dividend payments would be Rs. 100.52 Crores.
Q4 2002-02 - Operational Review
-- Metal production was 70,529 MT, 11% higher over production of 63,667 MT in the corresponding Quarter of the previous year, consolidating efficiencies and ongoing stabilisation of the newly commissioned 9th Potline have been the volume drivers.
-- The output of Rolled Product was 17,916 MT, 17% higher over that of
15,328 MT in Q4 last year, the result of improved capacity utilization and were constituted of an improved mix.
-- Alumina production (Calcined) has been maintained at 130,780 MT. The alumina refinery is operating at an over rated capacity with a successful emphasis on stretched process parameters as well as stabilizing of the innovative sweetening process in the ongoing brownfield expansion.
-- Redrawrod output has risen by 10% to 13,766 MT as against 12,551 MT in the previous year. The growth has been supported by market demand.
-- Production of Extrusions was 4,002 MT vis-à-vis 4,291 MT in the previous year. The quarter saw an improvement in demand for Extrusions, boding an improved outlook for this segment. However, the market for Extrusions during the year under review was week.
-- Foil production soared by an impressive 36% to 4,760 MT as against 3,510 MT in the previous year. The higher output has been feasible with optimal utilisation of facilities and successful marketing.
-- Production of Aluminium Alloy Wheels at your Company's Plant in Silvassa stood at 5,818 Wheels, higher than output of 5,616 Wheels last year. Intensive marketing efforts during the year under review, are expected to enable a further gradual increase in output of Wheels.
-- Power generated at your Company's Renusager Plant was 1223 MU as against 1113 MU, a growth of 10%. Power generation from the Co-generation Unit grew 13% to 78 MU from 69 MU in the preceding year.
Comparison - Fiscal 2002 Vs. Fiscal 2001
The Company's Fiscal performance during Fiscal 2002 (2001-02) and Fiscal 2001 (2000-01) is tabled below:
(Rs. in Crores)
| ||FY 2002 ||FY 2001 ||Growth %|
|Net Sales ||2331.3 ||2275.4 ||2.5 |
|Profit before Deferred Tax ||748.0 ||678.1 ||10.3 |
|Net Profit ||686.0 ||678.1 ||1.2 |
FY 2001-02 Vs. FY 2000-01
(Qty in MT)
| ||FY 2001-02 ||FY 2000-01 ||%Change |
|Aluminium Metal ||261,338 ||251,492 ||3.9 |
|Alumina Calcined ||494,724 ||476,700 ||3.8 |
|Redraw Rods ||52,203 ||43,946 ||18.8 |
|Extrusions ||16,250 ||18,602 ||(12.6) |
|Rolled Products ||70,113 ||62,800 ||11.6 |
|Foils ||17,209 ||12,756 ||34.9 |
|Alloy Wheels(Nos) ||22,889 ||23,058 ||0.7 |
Power Availability M.U.
|Power Sent Out: || || ||% |
|Renusagar ||4053.6 ||3977.0 ||1.9 |
|Co-generation ||242.0 ||236.8 ||2.2 |
The Company's Plant performance during Fiscal 2001-02 has been noteworthy. The Company has scaled down the output of Extrusions in view of weak market conditions. The demand for Extrusions is now in the revival mode. Intensive marketing efforts for Alloy Wheels are expected to yield a progressively better performance from this segment.
A 3 Year Wage Agreement which spans the period January 2002 to December 2004 has been signed with recognized Trade Unions. The Agreement provides for considerable benefits to the workforce and is expected to promote productivity, and ensure sustained industrial harmony which has been a key enabler of the Company's ongoing success.
Share Buy Back
As part of its ongoing Shareholder Value creation and also to utilize surplus cash available, the Company has initiated a buy-back of Equity Shares from Stock Exchanges, in fiscal 2002. The buy-back is to be limited to an aggregate amount not exceeding 10% of the existing paid-up Capital and Free Reserves of the Company. Till date, the Company has bought back approximately 1% of Equity Shares.
Hindalco is in the midst of a Rs. 1800 Crore brownfield expansion at Renukoot. On its completion Aluminium Smelting Capacity will increase by 100,000 MTPA to 342,000 MTPA, Alumina Refining Capacity will be augmented by 210,000 MTPA to reach 660,000 MTPA (450,000 MTPA) and Power Generation Capacity will stand enhanced to 769 MW (619 MW). Plans for the installation of a 37 MW of Co-generation Capacity at Renukoot are on the anvil. Additional power from this facility will make metal production of 360,000 MTPA feasible.
The expansion is progressing as scheduled. One new Potline in the Company's Smelter was completely commissioned in September 2001, enabling an increase of 10,000 MT in Metal production during Fiscal 2001-02. An innovative sweetening process has been stabilized for considerable gains in the Company's Alumina Refinery. Work on further additions to Smelting, Alumina Refining, as well as Power Generation Capacity is on line with expectations.
Substantial progress is expected on the ongoing expansion in Fiscal 2002-03. It will be completed in Fiscal 2003-04. The newly planned additional Co-generation capacity of 37 MW is to be commissioned in Q1 2004-05.
Other Growth Initiatives
Efforts to optimize synergies with the subsidiary Indian Aluminium Company Ltd. (Indal), towards mutual benefit is yielding results. The two Companies have grown tolling of alumina, continue to exchange best practices spanning all areas of activity, and are working for cohesive marketing efforts.
Hindalco has also made good progress in the implementation of a structured Profit Improvement Programme. The programme targets savings in the vicinity of Rs. 40 Crores over a two year period through stress on higher productivity, lower costs, strengthening efficiencies, and lower inventories.
In April, 2002 the Company initiated a phased implementation of an advanced IT System entailing an estimated expenditure of Rs. 24 Crores over the next 2-3 Years. The System will integrate operations, ensure real time data availability and enable improved and faster decision making. The system will also address the critical dimension of strengthened customer care through improved Supply Chain Management and Customer Relation Management Systems.
Aluminium sector went through a difficult period in Fiscal 2002. The downturn is not unusual, given the weak global economic environment as well as the cyclical nature of the aluminium business. Nevertheless, the fundamentals for Aluminium remain intact - aluminium has carved a substantial niche for itself in our every day lives - and the strengthening economic outlook is expected to revive consumption growth. Hindalco continues to benefit from its unique competitive strength, to record a strong performance, even during periods of cyclical downturns. The outlook for the Company is positive, with economic indicators signaling a revival of the global economy.
Indian Industrial production growth which has disappointed in Fiscal 2002 is expected to strengthen progressively, driven by the strong performance of the Agricultural Sector. In the US, the recession which began in March 2001 has run its course, with the US economy recording strong growth in Q1 Calendar 2002. A positive impact of the recovering US market on the global economy is inevitable, and the fundamentals for the aluminium business are expected to change for the better in a gradual manner. Strengthening consumption will bring down inventories, with a salutary impact on prices.
In fiscal 2002 Hindalco has gained partially from its ongoing brownfield expansion. The Company continues to achieve encouraging results from its structured profit improvement exercise. Increasing gains are expected to result from strengthening synergies with Indal. Higher volumes as well as increased product diversity, accompanied by aggressive marketing efforts, will strengthen the Company's leadership in India, and enable an enlarged presence in global markets.