Hindalco Industries, an Aditya Birla Group company, expects rising oil prices, hardening inflation, firming bond yields and widening current account deficit to be the key challenges even as the economy shows signs of recovery.
The company has received shareholders approval to raise ₹6,000 crore through non-convertible debentures.
Addressing shareholders at the company’s 59th Annual General Meeting, Kumar Mangalam Birla said the present positive economic outlook gets a bit dimmed when one views the increased trade protectionism, rising international crude prices, geo-political risks and the uncertainty about tightening monetary policies in advanced economies.
The ongoing global trade friction, more so between the US and China are worrisome and can have a spillover negative effect on India, he said.
In this backdrop, he added Indian economy has shown considerable resilience to the transitory effects of demonetisation and implementation to Goods and Service Tax.
The outlook on aluminium prices is expected to be bullish with the demand outstripping supply by one million tonne excluding China, said Birla.
Answering shareholders’ query, he said the company has not benefited from the shut-down of Sterlite Industries plant in Tamil Nadu as imports increased sharply.
Highlighting the coal linkages, Birla said Hindalco has secured 11.9 million tonne of coal via linkages and it accounts for 71 per cent of the annual coal requirements. The overall annual requirement of coal is at over 90 per cent through long-term linkages and captive mines.
Currently, he said three captive mines are operational and the fourth captive mine at Dumri is likely to be operational by the end of this fiscal.
To strengthen the balance sheet, he said Hindalco has prepaid close to ₹8,000 crore of long-term project loans in India.
On Aleris acquisition, Birla said it adds to Hindalco’s ability to bring in the latest capabilities in aluminium value-added products to India. The Indian aluminium market is at the cusp of growth similar to that of what China witnessed a decade ago.
Given its synergy with Novelis, Hindalco has become the market leader in aluminium value-added products in India and is poised to capture this growth in the future, he said.