Hindalco Industries Ltd. has reported a 27.9% fall in its first quarter consolidated net profit to ₹1,063 crore due to the global downturn and lower commodity prices.

The fall in profits were reported on a 3.6% dip in revenue to ₹29,972 crore and a 13% fall in (earnings before interest, tax, depreciation and amortisation (EBITDA) to ₹3,769 crore.

About 79% of Hindalco’s consolidated EBITDA is non-LME linked.

The metals flagship firm of the Aditya Birla Group reported a consolidated profit before tax (and before exceptional items) of ₹1,578 crore during the quarter, compared to ₹2,275 crore in the year earlier period.

“The diversified business model that Hindalco has with upstream and downstream business allows the company, in times of a downward commodity cycle, to outperform competitors... The Indian aluminium business was down as the prices of aluminium were down during the quarter,” Satish Pai, managing director, Hindalco Industries, told The Hindu.

“The organic expansion projects for Novelis in U.S., China and Brazil are progressing on time and on budget. Digital transformation at Novelis is underway to further drive world-class manufacturing operations across regions,” the company said in a statement, adding that all regulatory approvals for the Aleris acquisition were expected to close in Q3 FY20.

On the delay in getting approval for the $2.1 billion Aleris acquisition, Mr. Pai said, “They are regulatory, dealing with various countries. It’s taking a bit more time. EU has taken a bit longer than anticipated.”

Funding capex

The company has a total outstanding debt of ₹39,800 crore, with ₹15,545 crore on the books of Hindalco Industries and $3.5 billion on the books of Novelis, with consolidated net debt to EBITDA at 2.69x as on June 30, 2019.

On deleveraging debts, Mr. Pai said, “Long-term loans remained unchanged from end-FY19. Most of Novelis debt is in the form of bonds. With lower LME prices, we expect to use cash from Hindalco to fund our capex of ₹2,200 crore this fiscal. We are going [into the] downturn with a very strong balance sheet.”