Aluminium maker Hindalco Industries will bring on stream its three greenfield projects by the first half of 2013.
Analysts, however, expressed concerns that subdued aluminium prices could put pressure on the operating income of the new projects.
While the 1.5 million tonne per annum (tpa) Utkal alumina project and 360,000 tonne per annum (tpa) Mahan project will be ready by April 2013, the Aditya alumina smelter will start rolling out metal by June 2013.
This will be accompanied by the start of its 135,000 tonne of Hirakud flat-rolled products factory with marginal production, which will be ramped up in the next 18 months.
“With all the expansions, it will be a new Hindalco – more efficient, lower cost of production and higher volumes,” said Debnarayan Bhattacharya, managing director, Hindalco.
However analysts feel it will be a more stressed company due to high exposure to LME aluminium prices, the global benchmark.
“For almost a year aluminium prices have remained under pressure in the range of $2,050-2,100 per tonne and that has been one of the reasons why the company had been going slow on its expansion as that would not fetch higher operating income from new projects,” said an analyst with a domestic brokerage.
He said low LME prices and high input costs have kept its margins at around 6%, which is not impressive, and the situation is not likely to change going forward much.
Unless LME aluminium prices go beyond $2,200 per tonne, the outlook for any of its expansions is not really good, he said.
Bhattacharya said since the Utkal project, which will feed alumina to Mahan and Aditya projects, will come up earlier, some initial batches of alumina will be sold in the merchant market.
He said LME aluminium may stay pressured in the near term, but expressed hope it would bounce back soon.
Another analyst from a domestic brokerage said the outlook for the company is expected to be muted, but with expansion projects coming on-stream, revenues could see a jump next fiscal.