MUMBAI: Despite the European Commission’s suspending the deadline to clear Novelis’ takeover of Aleris, Hindalco, the Indian parent of Novelis, is confident that the acquisition will be completed as schedule.
Speaking to Mint on Thursday, Satish Pai, MD, Hindalco Industries, said: “I don’t think we should be too perturbed by the “stopping of the clock" by the EC. It’s a fairly routine procedure, we’re fairly certain they will restart the clock again. We are not deviating from our stance that we will complete the regulatory requirements by Q2. We will respond to the EC’s questions in the next 3-4 days."
“Europe is not where we expect anti-trust issues," Pai continued. “Aleris in Europe is in the aerospace business. It has one auto plant in Duffel which is about 60 kilotonnes and there are 5 other suppliers of auto sheet in the European Union. In fact, the EU has excess supply of automotive sheet."
“It’s in the US where we are working on the anti-trust more closely and the process is ongoing. A decision will have to be made by the Department of Justice by June. We remain confident that we will complete all regulatory approvals by Q2 of this financial year," Paid added.
Last July, Hindalco announced that its US subsidiary Novelis would buy out Aleris for an enterprise valuation of $2.58 billion. After the acquisition, Hindalco will be the second largest aluminium company in the world.
Pai was speaking with the media to announce Hindalco’s quarterly results for the January- March 2019 quarter. Hindalco (and the Utkal Alumina subsidiary) reported net profit of ₹506 crore for the March quarter, down 18% from the ₹616 crore in the same period last year. Revenue from operations rose 7% year-on-year to ₹12,455 crore. However, earnings after interest, taxes and depreciation on aluminium ( ₹1043 crore) and copper ( ₹315 crore) fell by 18% and 4% respectively as metal prices suffered a downturn globally. For the full year, the company reported net profit of ₹2678 crore, up 38% year-on-year from ₹1934 crore in FY18.
Consolidated profit for the year, including the US subsidiary Novelis, stood at ₹5495 crore, lower by 10% than the ₹6083 crore it reported in FY18. “In India, our increased focus on downstream is already showing encouraging results with record aluminium value added product volumes this year. In copper too, the share of value added products (copper rods) has risen, helping the business maintain profitability."
Brownfield expansion of Utkal Alumina by 500 kilo tonnes will happen through FY20, incurring capital expenditure of ₹600 crore. “The expanded capacity will become operation in September 2020," Pai said." We are investing another ₹2000 crore also for capex in FY20."
