BackHindalco to invest $180 million in Brazil, close Aleris deal by April
The Aditya Birla group-owned Hindalco to expand its rolling capacity in Brazil by 100 kilo tonne
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Mumbai: Aditya Birla Group-owned Hindalco Industries Ltd, India’s largest aluminium producer, plans to invest around $180 million to expand its rolling capacity in Brazil by 100 kilo tonne (KT), managing director and chief executive officer Satish Pai said on Friday.
“We will do a bit of capacity addition in Brazil where we have 80% market share (in the aluminium segment). We will add another 80-100KT for expanding rolling capacity there," Pai said.
Hindalco, which announced the acquisition of US-based aluminum sheet maker Aleris Corp. in a $2.58 billion deal earlier this year, hopes to close the transaction by April 2019.
“All is progressing well. Though no clearances have come yet, we don’t have any red flags either. Financial closures will happen when we close regulatory aspects of the deal," Pai said.
Hindalco in July announced its $2.58 billion acquisition of Aleris Corp. through its US subsidiary Novelis, agreeing to pay $775 million in cash for Aleris and absorb the company’s debt of $1.8 billion.
Hindalco’s purchase of Aleris will be completely debt-funded. “The $775 million (of cash payment) will be funded through a five-year term loan and the rest will be through a one-year bridge loan. We will refinance the loans and call back the bonds," Pai said.
On Friday, Hindalco reported a standalone net profit for the September quarter, which along with profits from Utkal Alumina stood at ₹ 725 crore, up from ₹ 470 crore during the same period of the last year.
The company’s total revenue (Utkal Alumina added) rose from ₹ 10,313 crore to ₹ 10,833 crore during the reporting period. Novelis also posted an Ebitda of $355 million, its highest ever, up 18% from $302 million.
It hopes to bag at least two coal mines for captive use during the coal mine auction next month. It aims to bid for two mines in Odisha, including Jamkhani coal mine.
“While, our total coal requirement stands at about 16 MT (annually), we would like to add mines that do 3-4MT a year," Pai said.
At present, Hindalco has four coal mines, which have a total of 4MT capacity annually. The company plans to mine at least up to 8MT of its coal requirements from its own mines, with its planned acquisition of new coal mines.
“Last time we got four coal mines (from auctions), which has given us a competitive advantage against others who are importing coal. Also, for smelters, the more captive mines one has, the better it is," Pai said, adding that he expects the government to prioritize coal towards the power sector in the coming months. During the coal block auction in September, the firm also won back 3.1MT Krishnashila coal linkage in Uttar Pradesh.
Hindalco is also adding 200KT automotive capacity in Kentucky, US, where the capex incurred is a over $300 million. In China, the capex incurred for expansion of the auto capacity stands at about $180 million for a 100KT brownfield plant expansion.
“The company’s organic capex (for FY 19) stands close to $500 million," Pai said. Hindalco’s net debt stands at ₹ 16,763 crore. In the last 14 months the firm has retired ₹ 10,000 crore worth of debt.
Pai said the plan to double Hindalco’s capacity of value added aluminium products from 300MT to 600MT in the next five years will not change. He, however, added that like the US the government in India should also take measures to protect domestic producers.
The company’s stock closed at Rs240.35 per share, up 4.03% on Friday at the BSE. The benchmark Sensex closed 1.68% up at 35,011.65.
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