Hindalco likely to complete Aleris acquisition by third quarter: Satish Pai

Aug 20,2019

Hindalco's consolidated results in the quarter have been a balanced as the overseas subsidiary Novelis has posted record results, says Satish Pai, its managing director. In an interview with Swati Khandelwal, Pai said US-China trade war had a negative impact on commodity prices.

If we have a look on the consolidated results, then it seems to be a balanced one because it has been a record quarter for our overseas subsidiary Novelis as its Ebitda is $372 million, up 11% quarter on quarter. Hindalco’s aluminium business in India went down due to LME prices, which were quite low, but the results of Novelis, which is a convertor business, have been up. So if we look at the combined consolidated results, then the results were quite good when compared to their competitors.

When we look at the price of any commodity prices and we will find that all of them are depressed a bit amid the ongoing US-China trade war. We must also have a look at the prevalent economic conditions of China and the European Union, which is under pressure. Therefore, the demand for copper and aluminium is less than 1% and this is something that had an impact on the commodity prices of almost everything such as aluminium, copper, oil & gas among others. The commodity prices will remain in pressure till there is not an end to the ongoing trade war between the US and China and there is a positive movement in the global economy.

Satish said if we have a look at Q1 against Q4 then the cost of production has declined by 3%. We believe that oil prices, like furnace oil, calcined petroleum coke, will decline. So we may see a 3-5% decline in cost of production in the second half of this fiscal.

He added that talks/negotiations are on with the European Union and it seems that they will be able to complete the Aleris acquisition by the third quarter of this fiscal.

Domestic demand for aluminium and copper has increased by 7% and 9% QoQ, respectively. At a time, when the economic growth of other countries is going down, Hindalco has seen a rise in aluminium and copper demand in India, which is quite strong at present. Interestingly, at a time when the government is talking about economic stimulus under which our economy will grow again by 6-7% or more, then the aluminium demand, which is growing by 7%, can grow by 10-11% if seen by keeping last year's growth in the backdrop.

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