MUMBAI: Despite the European Commission suspending the deadline to clear Novelis’ takeover of Aleris, Hindalco Industries, the Indian parent of Novelis, is confident that the acquisition will be completed on schedule.
In an interview on Thursday, Satish Pai, managing director, Hindalco, said: “I don’t think we should be too perturbed by the ‘stopping of the clock’ by the EC. It’s a fairly routine procedure, we’re fairly certain they will restart the clock again. We are not deviating from our stance that we will complete the regulatory requirements by Q2. We will respond to the EC’s questions in the next three to four days."
“Europe is not where we expect anti-trust issues," Pai said. “Aleris in Europe is in the aerospace business. It has one auto plant in Duffel which is about 60 kilo tonnes and there are five other suppliers of auto sheet in the European Union (EU). In fact, the EU has excess supply of automotive sheet."
“It’s in the US where we are working on the anti-trust more closely and the process is ongoing. A decision will have to be made by the Department of Justice by June. We remain confident that we will complete all regulatory approvals by Q2 of this financial year," Pai added.
Hindalco announced last July that its US unit Novelis would buy Aleris at an enterprise value of $2.58 billion. A deal would make Hindalco the world’s second-largest aluminium producer.
In March this year, EU anti-trust regulators said they have started a probe into Novelis’ plan to buy Aleris.
On Tuesday, the European Commission “stopped the clock" on the probe, a process that is set in place when the parties concerned fail to provide timely information to the body.
Pai was speaking to reporters after Hindalco announced earnings for the March quarter. Hindalco (and its subsidiary Utkal Alumina) reported net profit of ₹506 crore for the March quarter, down 18% from the ₹616 crore in the same period last year. Revenue from operations rose 7% year-on-year to ₹12,455 crore.
However, earnings after interest, taxes and depreciation on aluminium ( ₹1043 crore) and copper ( ₹315 crore) fell 18% and 4%, respectively as metal prices suffered a downturn globally.
Consolidated profit for FY19, including Novelis, fell 10% to ₹5495 crore from ₹6083 crore in FY18.