Hindalco Q3 | Record PAT & 45% Aluminium Margins | ₹50,000 Cr Expansion Plan Explained | Satish Pai

So firstly let's talk about the market and the market demand for aluminium. So we have seen that in all sectors whether it's transportation, buoyed by the GST reforms, auto sales have been very strong, packaging, the electrification sector, white goods, food cookware, so in all these sectors we have seen very strong demand for aluminium. I think that's why if you see even our downstream had a record quarter, 55% up year on year, which shows the strength of the aluminium demand in the country. As you said about copper, TC/RCs are low but the byproduct realization whether it is from sulfuric acid or other metals that are in the value chain, we delivered close to the 600 crores per quarter that we have been guiding to. Also just to talk about the copper market, that also demand year on year was about 10% up, so again driven by electrification, wires and cables, transformers, the demand for copper has been very strong.

So we are halfway through Q4 and the prices have been extremely resilient. So I think what you're seeing is a combination of supply demand being tight along with various investor sentiment which has driven commodity prices. It's not just aluminium and copper. Most commodity prices are at all-time highs. So I think you're seeing a lot of investor sentiment and investor interest in the metal space right now. And the fact that the fundamentals which is supply demand is quite tight is what is keeping the commodity prices very firm.

I think that's a very good question because what we are seeing now is this whole emerging space on electronics manufacturing and defense. These are two sectors that the government is prioritizing and we are starting to see a lot of foreign companies coming into this space whether it's in the mobile phone space and we are seeing lots of talks about defense manufacturing starting in the country. So both these things are very good for our aluminium and copper business. But at Hindalco are you into specialized aluminium and metals there or you will need to have put in some capacities to cater to this future demand which is coming in. So we have just commissioned our state-of-the-art rolling mill in Sambalpur which makes aluminium foil as well as aluminium coil that will serve both the EV electric battery market as well as the defense sector. We also have a state-of-the-art extrusion plant that we have commissioned in Silvasa which takes care of automotive as well as aerospace. So as you know that Hindalco has gone further downstream into engineering goods and I think that our strategy to move towards more value added aluminium and copper actually is allowing us to take care of these market opportunities that are emerging.

So we have announced as you know a pretty aggressive 50,000 crore capex plan over the next 3 years. So over the next two years we are going to be commissioning an alumina refinery in Odisha. We are going to be commissioning a copper recycling plant in Gujarat. We are doing an aluminium smelter expansion in Odisha and a copper smelter in Gujarat. So overall we are going to take our aluminium capacity close to 1.7 million tons from the current 1.3 and the copper is going to go from 400 KT to 750 KT. So quite a big investment in growing the upstream capacities. On the downstream side, we are now at 600,000 tons in aluminium with the commissioning of the rolling mill in Odisha and the extrusion plant in Silvasa. So big capex plans to grow the capacities both upstream and downstream in India.

So the first thing I wanted to say is that Novelis's quarter if you strip out the fire was an extremely good quarter for us. If you look at the EBITDA per ton on an adjusted basis was close to $500 a ton. So the underlying business of Novelis is doing very well. The scrap spreads are very beneficial. Our cost cutting plan is ahead of target. So all we need to do is to get the Oswego mill back online which we are planning to do somewhere in the middle of quarter 1. So once that comes up then those volumes will also come back. By the way I think that Q4 will be a much stronger quarter for Novelis compared to Q3.