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Copper is a drag on Hindalco performance — Second-quarter net down 7%

Our Bureau

Mumbai, Oct. 29

HINDALCO Industries Ltd has reported a 7 per cent drop in its second quarter net profit at Rs 276.5 crore on account of losses in its copper business.

The company's net sales and operating revenues during the quarter grew 8 per cent to Rs 2,660.8 crore against Rs 2,455.9 crore in the year-ago period. "Copper has been a drag on our performance," said Mr D. Bhattacharya, Managing Director, Hindalco Industries Ltd.

The copper business recorded revenues of Rs 1,246.4 crore (a rise of 7 per cent) due to an increase in prices at the London Metal Exchange. Copper recorded a loss of Rs 69.2 crore in the second quarter against a profit of Rs 69.8 crore in the year-ago period.

A drop in customs duty on imports, removal of export benefits and the five per cent appreciation in the rupee against the dollar did not augur well for the metal. Floods in Gujarat and underperformance of one of the company's smelters resulted in a shortfall in production during the quarter. Copper production is expected to be 50 per cent higher in the second half of this fiscal.

Input costs up: Rising input costs put pressure on margins. The prices of major inputs such as caustic soda and fuel went up. Caustic soda moved up from Rs 13,000 a tonne to Rs 22,917 a tonne year-on-year.

Due to the unilateral reduction in coal linkages by Coal India Ltd, the company was forced to opt for an e-auction. About 19 per cent of coal was sourced through the e-auction.

Margins are expected to be stable during the second half of the year, Mr Bhattacharya said. Operating margins improved to 36.9 per cent compared to 34.4 per cent during the year-ago period.

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