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Bhubaneswar, Sept 18: Terming its outlook on aluminium business as cautiously optimistic, private metal major – Hindalco said investment phase of the company has been largely completed and all the new projects are inching towards their full capacity levels.
The company, which has come out with its annual report recently, also flagged up concerns relating to business disruption arising due to cancellation of coal blocks.
“The cancellation of earlier allocated coal blocks has affected the cost dynamics of the new facilities adversely. The operating costs are not yet optimal as projects are ramping up,” it said adding that recent weakness in aluminium price is expected to keep margins under pressure.
However, the company said it is taking various measures to mitigate the impact of such events on its cost structure. “We are trying to mitigate these adversities through a sharp focus on cost reduction in day-to-day operations, optimisation of logistics costs, and by identifying high-impact, capex-light interventions to improve our structural cost position,” it said in its annual report.
Talking on Utkal Alumina, the company said while the economics of aluminium smelters has been affected by de-allocation of coal blocks, the bauxite value chain continued to play its part as per the plan; and Utkal alumina project is delivering world-class alumina at a very competitive cost.
It also said that Utkal Alumina refinery achieved near-full capacity utilization last fiscal making it one of the lowest cost alumina refineries globally. Similarly, Aditya smelter ramped up capacity to nearly 50 per cent during this period.
Giving overall outlook for its business, it said, “FY16 onwards, following the full ramp up of the projects, the reported financial performance will be significantly impacted as interest and depreciation flow through the P&L statement. As a result, the short term outlook appears challenging for domestic aluminium business.” In the coming years, the focus will be on operational excellence and increasing the productivity of new assets, it added.
