While Novelis Inc. was always an important part of Hindalco Industries Ltd’s consolidated financials, its relevance is set to increase. Firstly, Novelis is making significant investments in its operations, both to add to capacity and increase value addition. Its management said capital expenditure in FY19 is pegged at $450 million, or 3,105 crore. Then, the acquisition of Aleris Corp. itself will cost $2.58 billion.

In India, Hindalco is reaping the benefits of its investments in previous years, with no major capex plans lined up.

There is a 500 kilotonne expansion at its Utkal alumina facility while a new, continuous cast rod plant is lined for a ramp-up. As Novelis’s expansion and acquisition result in higher volumes, its importance in the consolidated mix will step up even further.

Consider the June quarter (Q1) results. Hindalco’s India business—including Utkal alumina—saw its Ebitda (earnings before interest, taxes, depreciation and amortization) increase by 17.5% to 1,951crore and by 8% sequentially. In the same period, Novelis saw its adjusted Ebitda increase by 14.9% to $332 million, or 2,291 crore. As Novelis’s output increases over the next few years, and Aleris is combined, its Ebitda will go far ahead of the India business.

Novelis said trade-related fears and market disruption due to sanctions have not affected its business. This quarter, Ebitda rose despite output getting affected due to downtime at one of its customer sites and a truckers’ strike in Brazil that disrupted its supply chain. As the situation normalizes, it expects full-year output to normalize.

India remains a key part of the business as is visible in the current quarter as well. The aluminium business is the one driving performance, as the US sanctions on United Company Rusal Plc roiled the market. Aluminium and alumina prices have both risen as a result, adding to profitability, despite relatively flat output as it is operating at full capacity. Another tailwind for the Indian business was the depreciation of the rupee against the dollar.

However, the copper business Ebitda has been relatively flat. A maintenance shutdown at one smelter resulted in lower output, but this should recover. Also, the share of continuous cast rods will increase, as utilization ramps up. This should see profit benefit from higher and value-added output. But treatment and refining charges continue to trend lower, which is a dampener.

Its standalone results also showed a stable situation on the power and fuel costs. Reported net profit rose by 43% to 414 crore over a year ago, and by 9.8% sequentially. Since it sources alumina from its own subsidiary, this purchase cost affects standalone margins. The combined (Hindalco+Utkal) results show that profit doubled to 734 crore over a year ago and by 19% sequentially.

The risks to Hindalco’s domestic business are primarily from volatility in aluminium prices, which are going up if the US is seen as hardening its stand on tariffs and sanctions and vice-versa. How alumina and aluminium prices behave is a key factor. Novelis seems to be on a steady footing but the main concern there should be if trade wars in some way affect either profitability or volumes.

Hindalco’s shares fell on Friday when it declared its results. It’s perhaps time the company switched to giving quarterly consolidated results. That will give investors a comprehensive picture, instead of stitching together a picture of its domestic aluminium, domestic alumina and overseas flat rolled products business (Novelis) as at present.