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Hindalco – Strong Q1/2010 and Expansion Projects

Additionally its low cost advantage, arising from integration and captive coal for own power generation for the Hirakud smelter, cushioned the adverse impact of spiralling cost escalations of crude and crude derivatives as well as purchased coal for Renukoot and plummeting copper TcRc. The company also benefitted from higher aluminium LME and better by-product realisation in its copper business. Other income and interest/ financing charges were constrained by lower returns on investment and lower average interest rate respectively.  Profit before tax is higher by 12 % at INR 673 crore vis-à-vis INR 600 crore in Q1 FY10. Net profit is at INR 534 crore as against INR 481 crore in Q1 FY10. Hirakud smelter: Operations of the aluminium smelter at Hirakud have been affected in July 2010 due to continuous bad weather with heavy rains and lightning. A team of experts have now completed the assessment of the situation and have formulated an action plan for quick revival of operations as well as certain remedial actions for the future. In line with the action plan currently under implementation, electrolytic cells taken out of circuit will be restarted in a phased manner. This exercise is expected to be completed by end-August 2010. As a consequence of this unforeseen outage, the Hirakud aluminium production is expected to be lower by around 20 000 t for the current fiscal.  The smelter expansion from 155 000 t/a  to 161 000 t/a is scheduled for completion by Q2 FY11. Smelter expansion from 161 000 to 213 000 t/a  along with 100-MW-power-plant expansions will be completed in Q4 FY12.  Further to the above, the smelting capacity at Hirakud is intended to be expanded from the proposed 213 000 t/a to 360 000 t/a with a corresponding increase in back-up captive power from the proposed 467,5 MW to 967,5 MW. UAIL: Utkal Alumina International Ltd. [UAIL],a 100 % subsidiary of Hindalco, is setting up a 1,5 Mt/a alumina refinery in Rayagada district of Orissa. The project will feed the alumina requirements of the Mahan and the Aditya smelters presently under construction.  Hindalco has successfully achieved the financial closure of UAIL with the signing of a common loan agreement of INR 4906 crore on July 28, 2010. This constitutes the entire debt requirement of the project. The loan documents were signed in Bhubaneswar by a group of 28 banks.  This project is expandable to 3 Mt/a at relatively lower incremental capital cost. This is a significant milestone in Hindalco’s strategy to grow its alumina capacity and play the entire value chain in aluminium. The construction of  a 1,5 Mt/a alumina refinery along with a 90-MW captive co-generation plant is in full swing. The output from UAIL would be sufficient to feed alumina to the Mahan and the Aditya smelters. Engineering for refinery and captive co-generation plant is nearing completion. Contractors are working at the site for civil and structural work and have mobilised more than 5000 people. Piling, fabrication, concreting and tank erection are all well underway. Major equipment like boilers, evaporators and turbines have started arriving at the site and erection and structural work for the various equipment is in progress. Orders for all the long delivery equipment have been placed. Around 82% of the project cost has already been committed. The production of alumina is expected to start around Q2 FY12. Belgaum special alumina project: The special alumina production from Belgaum is proposed to be ramped up to 316 000 t/a from 138 000 t/a. To reduce the cost of production substantially, a proposal for an 18-MW co-generation power plant and a railway siding facility are also being evaluated.  Mahan aluminium project: A 359 000 t/a  aluminium smelter capacity along with a 900-MW captive power plant is coming up in Bargwan, Madhya Pradesh. Around 10,000 people are working at the site. Site grading work, boundary wall and piling are nearing completion. Concreting and structural work is progressing in line with the first pot start up schedule. Work on boiler foundation, ESP, powerhouse units and chimney rafts is progressing in full swing. Erection of engineering structure for boilers is in progress. Major equipment has started arriving at the site. Around 82 % of the total project cost has been committed. The first metal from the smelter is expected by Q2 FY12.
Aditya aluminium project: A 359 000 t/a aluminium smelter along with a 900-MW captive power plant is coming up in Orissa. Major orders have been placed for both the smelter and the power plant. Around 59 % of the total project cost for the smelter and power plant has been committed. Site activities like area grading, boundary wall are in progress. The first metal from the smelter is expected by Q3 FY12 Aditya refinery project: A 1,5 Mt/a alumina refinery along with a 90-MW co-generation plant is coming up in Orissa. This is a replica of the Utkal alumina refinery. The refinery would be mechanically complete by Q1 FY14. Jharkhand aluminium project: A 359 000 t/a aluminium smelter along with a 900-MW captive power plant is coming up in Sonahatu, Jharkhand. This is a replica of the Aditya / Mahan smelter. The land acquisition process has already started. Activities for getting environmental clearance have started and a presentation has been made to the MOEF expert committee. The Tubed coal mine has been allotted jointly with Tata Power. The first metal from the smelter is expected by
Q1 FY14.


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