Kumar Mangalam Birla said to target record aluminum production

Hindalco Industries Ltd, India’s second-largest aluminum producer, is targeting a record output of the lightweight metal this fiscal year to resurrect earnings estimated to have plunged to the lowest in nine years. Billionaire chairman Kumar Mangalam Birla plans to raise production by more than 50% to about 1 million tonnes in the year ending 31 March, two people familiar with the plans said. “The higher output will mainly come from the Mumbai- based company’s new units in the central state of Madhya Pradesh and the eastern state of Odisha,” said the people, who asked not to be identified, pending an announcement.

Alcoa Inc., the largest US aluminum producer, last month forecast demand will exceed production this year, predicting an end to an almost decade-long surplus driven by Chinese output. Aluminum prices averaged at a nine-year low on the London Metal Exchange in the year to 31 March, leading producers including United Co. Rusal, the world’s biggest, and Alcoa Inc. to idle capacity and Rio Tinto Group to take a $1.3 billion writedown on its aluminum business.

Hindalco shares rose as much as 6.2% to Rs.139.85 and traded at Rs.139.40 as of 1:06pm in Mumbai. The stock has gained 37% in the past year, compared with a 15% gain in the benchmark S&P BSE Sensex. Company spokeswoman Pragnya Ram declined to comment ahead of the company’s quarterly earnings. Profit outlook

Hindalco, excluding its Atlanta-based unit Novelis Inc., may post a profit of Rs.1,530 crore ($255 million) in the 12 months ended 31 March, according to the median of eight analyst estimates compiled by Bloomberg. The earnings, which would be the smallest since the year ended 31 March 2005, were probably eroded after the global prices of the metal crashed and inventory surged.

Worldwide output of the metal has increased at a 5.2% compound annual growth rate since 2001, according to Kenneth Hoffman, global head of metals and mining research for Bloomberg Industries.

Hindalco’s new factories may produce as much as 46% of the company’s total output this year, the people said. The annual 359,000 tonne-smelter at Mahan in Madhya Pradesh was started in the three months ended 30 June, while the Odisha factory with similar capacity was commissioned in January.