Hindalco likely to complete Aleris acquisition by third quarter: Satish Pai

Hindalco's consolidated results in the quarter have been a balanced as the overseas subsidiary Novelis has posted record results, says Satish Pai, its managing director. In an interview with Swati Khandelwal, Pai said US-China trade war had a negative impact on commodity prices.

Standalone numbers are weak and sliding prices of copper and aluminium had an impact on your margins. How will you summarise the quarter?

If you have a look on our consolidated results, then it seems to be a balanced one because it has been a record quarter for our overseas subsidiary Novelis as its Ebitda is $372 million, up 11% quarter on quarter. Our aluminium business in India went down due to LME prices, which were quite low, but the results of Novelis, which is a convertor business, have been up. So if you look at the combined consolidated results, then the results were quite good when compared to our competition.

The Chinese government has devalued yuan. Will this add more pressure on global metal prices?

Have a look at the price of any commodity prices and you will find that all of them are depressed a bit amid the ongoing US-China trade war. You must also have a look at the prevalent economic conditions of China and European Union, which is under pressure. Therefore, the demand for copper and aluminium is less than 1% and this is something that had an impact on the commodity prices of almost everything such as aluminium, copper, oil & gas among others. The commodity prices will remain in pressure till there is not an end to the ongoing trade war between the US and China and there is a positive movement in the global economy.

What is the cost of production and target for coming quarters?

If you have a look at Q1 against Q4 then our cost of production has declined by 3%. We believe that oil prices, like furnace oil, calcined petroleum coke, will decline. So we may see a 3-5% decline in cost of production in the second half of this fiscal.

Update us on the reports that say that the European Commission has asked for some more concessions for the acquisition of aluminium processor Aleris.

I can just say that talks/negotiations are on with the European Union and it seems that we will be able to complete the Aleris acquisition by the third quarter of this fiscal.

What would be the growth drivers for Hindalco in coming quarters?

Domestic demand for aluminium and copper has increased by 7% and 9% QoQ, respectively. At a time, when the economic growth of other countries is going down, we have seen a rise in aluminium and copper demand in India, which is quite strong at present. Interestingly, at a time when the government is talking about economic stimulus under which our economy will grow again by 6-7% or more, then the aluminium demand, which is growing by 7%, can grow by 10-11% if seen by keeping last year's growth in the backdrop.

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