Mumbai: Addressing the shareholders at Hindalco’s 58th AGM, Mr. Kumar Mangalam Birla, Chairman, was optimistic on the economy front and on Hindalco’s future growth trajectory. He remarked that, “The abiding sense is one of immense optimism and confidence in the future with the nation slated to grow at 7.5% to 8%. In order to revive investment activity and the creation of quality jobs in large measure, the Government has taken several steps, including a sharp focus on improving the ease of doing business, speeding up of green clearances and stepping up public sector outlays for infrastructure. The Reserve Bank’s focus on NPA resolution is aimed at igniting a virtuous cycle of growth”. In Mr. Birla’s view it is a matter of time before private sector investments pick up.
Moving on to the Company’s performance, Mr. Birla stated that, in an environment of mixed economic signals, Hindalco’s performance had been commendable in FY17. It registered a record Consolidated EBITDA at Rs.13,547 crore on a turnover of Rs.102,631 crore. Both Aluminium and Copper Businesses in India and Novelis registered robust operational performance.
With the new coal linkage in FY2017, coal security improved to over 60% of the annual requirement of the Domestic Aluminium Business. In FY17, Gare Palma IV/4 Coal Mines and Gare Palma IV/5 Coal Mines reached their peak capacity. The operations at Kathautia Mines commenced in February 2017.
FY17 was a remarkable year for Novelis. Operational efficiencies and a strategic product shift supported record results and automotive shipments. The share of auto products increased from 15 percent in FY16 to 18 percent in FY17.
Speaking on Novelis, Mr. Birla commented that, “Novelis’ thrust on sustainability and recycled aluminium is unparalleled. Novelis has widened the scope of recycled scrap for reuse. It has developed close loop recycling systems with end users to improve efficiencies. Novelis has now increased the input of recycled material from 51 percent in FY16 to 55 percent in FY17. In line with our stated objective to deleverage the balance sheet, Hindalco successfully raised USD 500 million through a Qualified Institutional Placement (QIP). Along with the treasury balance this amount was utilised to prepay the existing borrowings. Consequently, there is a substantial improvement in Consolidated Net Debt to EBITDA. Novelis refinanced USD 4.3 billion of its long term debt. The annual cash interest expense stands reduced by USD 79 million. Novelis entered into a JV agreement in May 2017 with Kobe Steel. It entailed selling 50 percent of Novelis’ ownership interest in its Ulsan, South Korea facility, for USD 315 million”.
On the Outlook, Mr. Birla opined that, “The domestic demand for aluminium in India is expected to benefit from the infrastructure projects prioritized by the Government. The Government thrust on power sector augurs well for your Company. The power sector is the dominant consumer of Aluminium in India. Other segments expected to see higher demand are the automobile and food packaging industries. Additionally rapid urbanisation should augment consumer demand. It will help sustain Aluminium growth in India. The per capita aluminium consumption in India is still below the global average. So there is a huge potential for higher consumption, given our demographic and economic outlook.
The domestic copper demand is led by the electrical and electronic products sector. They account for 34% of total Indian copper consumption. A strong growth in end user segments such as winding wires, power cables and other user applications further bolsters it”.
In conclusion, Mr. Birla lauded, the Government’s initiatives to spur the industrial sector and private investments as commendable, given that these are all growth focused. He made a particular mention of measures set afoot such as, housing for all, the creation of 100+ smart cities, the thrust on infrastructure especially rural infra development, Make in India, Digital India. In Mr. Birla’s words, “These steps among others will enhance the expansion of industries and services together. It is expected to create a platform for robust demand in the aluminium and copper sector”.
Mr. Birla also alluded to Hindalco’s endeavors towards inclusive growth and synergizing growth in a sustainable manner. Hindalco works intensively in 676 villages and 23 urban slums in proximity to its manufacturing plants. Its activities are implemented under the aegis of the Aditya Birla Centre for Community Initiatives and Rural Development, led by Mrs. Rajashree Birla. As a caring corporate citizen, Hindalco aims to actively contribute to the social and economic development in the communities in which it operates. The major areas of focus are education, healthcare, sustainable livelihood, infrastructure development and social empowerment and welfare. The Company’s efforts have made a qualitative difference in the lives of the marginalized pan India.
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