The outlook for Novelis in fiscal 2011 appears good, with the management expecting regions such as Asia and South America to continue to drive growth, even as developed markets trudge back to normal levels.

The company will continue to focus on operational improvements, with adjusted Ebitda in fiscal 2011 to exceed $1 billion compared with $754 million in 2010. Novelis is investing in higher capacities, especially in South America, during 2011 and will also acquire additional capacity in markets such as Asia. It also plans to invest further to improve operational efficiencies across its plants. Overall, it will spend $250 million, or around 2.5 times what it spent in 2010.

While the long-term demand outlook for Novelis seems good, its higher capital expenditure plans and the lag effect of rising aluminium prices in the fourth quarter may see some effect on its shorter-term free cash flows. Aluminium prices have begun to decline in the first quarter of 2011. While prices are a pass-through for the company, as it is a processor, its quarterly results may show some volatility as a result.

Hindalco’s consolidated balance sheet, too, appears stronger. Its debt-to-equity ratio has improved to 1.1 times as of 31 March, from 1.8 times a year ago. That will allow it to fund its domestic expansion plans without unduly straining its balance sheet.

In the longer term, its performance will be driven both by its domestic expansion programme and continued growth at Novelis.

In the near term, however, falling aluminium prices could pose a threat to the profitability improvements seen in recent quarters.

Source: http://www.livemint.com/2010/06/06232133/Novelis-turns-strong-ally-for.html?h=B

BHUBANESWAR, India, June 9 (Reuters) India's state run National Aluminium Co Ltd (NALU.BO: Quote) has cut prices by 6,000 rupees ($127.5) per tonne in line with the London Metal Exchange, a senior company official said Wednesday.

"We have reduced the price of all aluminium products because the LME aluminium prices have come down," said the official, who could not be named due to company policy.

NALCO, the country's third-largest aluminium producer, produced 431,000 tonnes of the metal in the fiscal year to March. ($1=47.03 Indian rupee) (Reporting by Jatindra Dash; Editing by Unnikrishnan Nair)

Source: http://af.reuters.com/article/metalsNews/idAFB69798620100609

Mumbai: Hindalco Industries plans to borrow about Rs 14,000 crore in the next couple of years to build two new plants that will treble its aluminium making capacity as increased production of cars and aircraft, fuel demand for the white metal.

The Mumbai-based metals major – that became one of the world’s top five aluminium makers after buying Canada’s Novelis in 2007 – needs about Rs 9,200 crore each for the Aditya Aluminium and Mahan Aluminium projects. It aims to start the plants by 2012, according to managing director Debu Bhattacharya.

The debt will be in the form of so-called non-recourse loans, which in this case means they won’t be on the books of Hindalco. Instead they will be secured by the assets of Aditya Mahan Aluminium. The loans will be repaid from the cash flow generated from the projects.

“If you include Utkal Alumina, then we have $5 billion worth of projects under execution and we intend to keep the debt-equity ratio at 70:30,” said Hindalco CFO Sunirmal Talukdar. “These are project finance loans under which lenders set certain milestones and after completion of those milestones, funds are disbused. Funds are not drawn down unless the project is on the ground,” he added.

The equity portion of the projects, which is 30% of the base cost, has already been tied up, said Mr Talukdar.

Aditya Aluminium is a Greenfield complex, producing both alumina and aluminium at a site in Orissa, Uktal Alumina, also in the same state, produces alumina, a feedstock for the metal. Mahan is a new aluminium plant in Madhya Pradesh.

The expansion is being geared to meet demand, “Aluminium demand in India is very positive due to auto, construction and electrical sectors,” said Mr Bhattacharya. Although world aluminium demand fell 8% in 2009 due to the slowdown, it is likely to rise 14% in 2010, mainly because of rising consumption in China and India.

Average prices of aluminium on the London Metal Exchange in the year ended March 31, fell 16.6% to $1,903.6 a tonne. Global demand for the metal which is also used in beverage cans is expected to increase 10% this year, led mainly by China. Mr Bhattacharya said that average aluminium prices would be about $2,000 per tonne.

Hindalco also said that it plans to acquire copper mines. “Our aim is to have 40% of our concentrate requirement from our own mines. We are still short of that,” said Mr Bhattacharya. Hindalco operates copper mines in Australia through its subsidiary Aditya Birla Minerals.

Share of Hindalco fell 5.8% to Rs 132.2 in a weak trading market, on a day when the broader market was down 1%.

By the year 2020, the Aluminium demand is projected to get increased to 70 million tonnes, with over 30 million tonnes obtained from recycled scrap. Recycling Aluminium that is currently in use as cars, commercial vehicles, ships, airplanes etc would equal up to 18 years of primary Aluminium output. The amount of Aluminium produced from old scrap has been growing from 1.4 million tonnes in 1980 to a whooping 6.8 million tonnes in 2004. The transport sector has been the most important resource of recycled Aluminium. Today recycled Aluminium is produced from 44% transport, 28% packaging, 10% engineering and cables and only a mere 7% from building applications due to its long use phase. Shown in the fig is a graphical representation of Aluminium scrap sources . However, Aluminium recycling will undergo major changes through the next decade. Buildings that contributes only 7% of aluminium scrap now; will represent up to 33%, recycled aluminium from transport will fall down to 32%. The schematic representation of the forecast is shown in the fig. The growing markets for Aluminium are supplied by both primary and recycled metal sources. The increase in demand for Aluminium and long life time of the products mean that the overall volume of primary metal will continue to be noticeably greater than the volume of recycled metal. It will be clear from the representation that the volume of primary metal will continue to be much more than recycled Aluminium if recycling rate is not increased. GLOBAL ENERGY SAVINGS DUE TO ALUMINIUM RECYCLING Recycling Aluminium saves up to 95% of energy required for primary Aluminium productions thereby avoiding harmful emissions including green house gases. Improving overall recycling rate of Aluminium is very much essential for sustainable development. Today, recycling of Aluminium scrap saves up to 80 million tonnes of green house emissions per year, which is equivalent to the emission of 15 million cars. The reduction in Co2 emissions in future by the End-life Aluminium recycling is predicted and shown below. The objective of the Aluminium industry for 2020 or beyond is to reduce the green house emissions, conserve less energy and avoid dependence on natural resources; with the help of recycling. All the energy inefficient materials used today will be replaced by Aluminium (especially transport applications). And so the demand for the same will shoot up. Inorder to eliminate the energy losses during the production of Aluminium due to this increased demand, recycling of Aluminium scrap has to be followed from now!

Source: http://www.petroscrap.com/demand-for-aluminium-by-2020

“Taking advantage of the recent economic meltdown, we have managed to shut down some of our high-cost manufacturing facilities which resulted in the cost savings,” he added. Hindalco has declared a dividend of Rs 1.35 an equity share for the fiscal year.

Adjusted EBITDA for the year was at $754 million, against $486 million, representing a growth of 55 per cent. Shipments of aluminium rolled products were marginally down 2 per cent at 2,708,000 tonnes (2,770,000 tonnes) largely due to softer end-market conditions, in most of the regions, in the first half of the year.

For the fourth quarter, shipments increased 18 per cent to 716,000 tonnes from 605,000 tonnes in the fourth quarter of the previous year, primarily due to strong growth in North America, Europe and Asia. Net sales in FY ‘10 decreased 15 per cent to $8.7 billion ($10.2 billion), due to lower prices.

Novelis reported that the net income attributable to its common shareholder of $405 million for fiscal year 2010, was significantly higher, compared to the net loss of $1.9 billion reported for the same period, a year ago.

The variations in aluminium prices do not impact Novelis, as the company passes on the impact of raw material cost to customers, said Mr Bhattacharya.

To debottleneck and increase capacity, primarily in South America and Asia, Novelis plans to invest about $150 million in FY ‘11. A significant amount is aimed at expanding its rolling operations in Brazil. The investment will increase capacity by over 50 per cent and support the rising demand for flat rolled products. The expansion programme is expected to be completed in 2012.

Outlook
Novelis expects the South American and Asian markets to continue to grow, while North America and Europe may see moderate increase in demand. The results are expected to continue to strengthen, given the market conditions, price increase and continued cost management initiatives, he added. The consolidated revenues of Hindalco Industries was down 8 per cent at Rs 60,722 crore (Rs 65,963 crore), while net profit rose eight-fold to Rs 3,925 crore (Rs 484 crore). Hindalco shares on the BSE were up one per cent at Rs 148 on Friday.

Source: Business Line – The Hindu, Saturday. June 05, 2010

With the support of several automobile manufacturers with new brands in the compact car category and easier availability of finance and the low-base effect of last year helped the Indian automobile industry to continue its growth momentum of 2009 into April 2010 as well, with passenger car sales reporting their highest growth in a decade. According to the Society of Indian Automobile Manufacturers (Siam), total passenger car sales in the country surged 39.5 per cent last month at 1,43,976 units during the same month last year. This is the highest growth in car sales in April in the last 11 years. Car sales had grown 50.3 per cent in 1999. However, on a month-on-month basis, there has been a decline of 7.4 per cent in domestic passenger car sales in April, signaling the upcoming impact of increasing commodity prices. According to SIAM data, 1,55,600 units of passenger cars were sold in March; 1,53,845 units in February; and 1,45,905 units in January. According to Jajoo, while new launches in the compact car category and easier availability of finance were some factors that supported growth so far, demand would get impacted from the second quarter onwards, as raw material prices continue to shoot up and higher base effect comes into play.

“On the back of overall improvement in the economy over the last few quarters, there is an improvement in customer sentiment and, therefore, high sales in April, which is traditionally a lean month, as people advance their purchases. However, we have already started seeing moderation in demand and, going forward, it could stabilize at these levels,” said Vishnu Mathur, the newly-appointed director-appointed director-general of Siam.

Source: Minerals & Metals Review Weekly, May 17, 2010

State-run National Aluminium Company (NALCO) plans to form three subsidiaries to boost its business diversification aims, a senior company official said Friday.

The subsidiaries may be formed depending upon the progress of the various projects such as metals and power generation the company has planned, Finance Director B.L. Bagra told IANS.

“This may happen earliest within two years or can take five years,” he said.

The new subsidiaries will be named Nalco Metal to deal with metals and mines business other than aluminium, Nalco Power to deal with power projects and Nalco International for its foreign projects, he said.

“Our core business is aluminium business which we want to retain as it is. All the growth oriented investments… in other metals or power or in foreign countries, we want to make through subsidiaries,” he said.

NALCO, headquartered in the Orissa capital, is Asia’s largest integrated aluminium producer. It is also a major player in bauxite mining, alumina refining and smelting with additional business interests in power generation and rail and port operations.

It has signed a deal last year with Nuclear Power Corporation of India to invest in a nuclear power project. It has also planned to invest abroad including in Indonesia and Iran.

Bagra said Nalco is not going to split at all. “The aluminium company will remain as holding company and only subsidiaries would be formed as an investment vehicle,” he added.

Nalco has planned to built a Rs.80-billion (Rs.8,000-crore/$1.6-billion) 310,000-tonne smelter and a power plant in Iran. It has currently approached several banks for funding of about $1 billion required for this project.

It has also planned to build an aluminium manufacturing project in Indonesia. Construction of the plant, conceived to produce 500,000 tonnes of aluminium using about 250 MW each from five power plants each, was expected to commence this year.

Source:http://calcuttatube.com/national-aluminium-company-nalco-plans-to-form-three-subsidiaries-48693/