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Hindalco promoters may raise stake to ward off takeover threat

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Q1 net profit jumps 59 pc Rs 601.5 cr; sales up 94 pc


Good performance
Operational efficiencies, thrust on value-added products and an innovative market-mix aided in growth, despite constraints in its copper business


EFFICIENCIES PAY: Mr Kumar Mangalam Birla (right), Chairman, Aditya Birla Group, and Mr D. Bhattacharya, Managing Director, at Hindalco's AGM in Mumbai on Friday. - Shashi Ashiwal

Mumbai , July 28

The promoters of Hindalco Industries Ltd plan to raise their shareholding in the non-ferrous metals company through the creeping acquisition route to protect it from a possible takeover, said Mr Kumar Mangalam Birla, Chairman, Aditya Birla Group.

At present, promoter holding stands at 25.95 per cent.

Earlier, Tata Steel and JSW Steel had said their promoters would increase their shareholding in the companies, respectively, primarily to ward off takeover threats.

Hindalco has reported a 59 per cent increase in its first quarter net profit at Rs 601.5 crore from Rs 379.2 crore in the year-ago period.

Net sales moved up 94 per cent to Rs 4273.7 crore from Rs 2207.1 crore in the year-ago period. Other income was Rs 77.6 crore (Rs 33.5 crore). Improved prices and strong demand helped the company's performance.

A sharp increase in fuel oil, coal, pitch and bauxite costs exerted considerable pressure on margins. On the positive side, the company benefited from a decline in caustic soda prices.

Speaking about the company's performance during 2005-2006, Mr Birla said that operational efficiencies, the thrust on value-added products and an innovative market-mix helped it, despite constraints in its copper business.

Aluminium contributed Rs 1654.2 crore, while copper revenues had a three-fold increase at Rs 2621.7 crore on higher copper prices and volumes.

However, Mr Debu Bhattacharya, Managing Director, Hindalco, said that prices of aluminium and copper would soften during the year.

The company has a capital expenditure plan of Rs 15,000 crore over the next two to three years to step up capacity expansions for both its aluminium and copper businesses.

The company is looking at acquisitions of copper mines to augment supply, Mr Birla told shareholders.

During the current fiscal, the company has set a production target of 460,000 tonnes of aluminium and 360,000 tonnes of copper. Export target has been set at one lakh tonnes of aluminium and 1.60 lakh tonnes of copper.

More Stories on : Metals | Metals | Outlook | Mergers & Acquisitions | Hindalco Industries Ltd

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