Hindalco proposes to repay INR 6,000 crore debt, plans to scale down capital expenditure

The Indian multinational aluminium and copper manufacturing company, Hindalco Industries formulates to repay INR 6,000-crore debt from next June to pull down its debt further.

The metal company has narrowed its net debt to INR 66,831 crore as of September end against INR 78,266 crore documented in the same phase the previous year.

The Managing Director of Hindalco Industries, Satish Pai commented by saying: “The current net debt to EBITDA level in India is about 1.25 times and repayment of bonds worth INR 6,000 crore is coming up from next June.”

He added: “This will be repaid completely from internal accruals as about INR 30,000 crore is lying in the treasuries.”

One of the leading power-intensive companies, Hindalco projects to outsource its green energy requirement by inking an agreement with third-party contractors to set up solar projects at its facilities and source power at a fixed rate.

“The company will enhance solar power sourcing from 57 MW to 100 MW by next March and will increase it further to 200 MW by 2025. “The CAPEX for the solar project will be put in by the green power producers. We will sign a long-term 20 years power purchase contract with the green power suppliers. It will be a fixed price with an escalation clause like in any other power contract,” said Pai.

However, the demand for aluminium in India has initiated to rebound following the decline in pick-up during the monsoon season, but it has fallen behind the pre-Covid stage.

The auto sector, which is considered as one of the vital consumers of aluminium was impacted by a semi-conductor shortfall, while the demand from the power conductors producers is also far behind the pre-Covid period.

“Besides these two sectors, the overall demand for aluminium is quite strong and Hindalco’s capacity is completely sold out”, said Pai

As the demand outlook for aluminium is looking robust, Hindalco will largely aim to expand both globally as well as in the domestic market in the upcoming quarter. However, for FY22, the company would have to marginally reduce the capital expenditure to INR 2,400 crore.

Pai stated: “We lost a few months to the second wave of Covid at the beginning of this fiscal. Due to this, we will have to end CAPEX for FY22 about INR 300 crore lower than planned.”

“The calendar year 2021 is going to end in a global aluminium deficit of 1 million tonnes and this deficit is expected to grow since demand is strong from packaging, industrial, transportation.”

Although there is a rise in cases of Covid both in Europe and China, still Hindalco Industries does not anticipate much impact on its business in those regions.

“Europe cases are going up but they are managing well since they have a high degree of vaccination. We are not expecting any demand problems in Europe and the US going forward. In China, our business is only 200kt of auto and most of our auto demand in China is flat out so we do not expect any impact to our business in China as well,” Satish Pai clarified.