Net sales increased to Rs 418 crore from Rs 302 crore in the corresponding period of last year. Net profit rose to Rs 125 crore from Rs 91 crore. Exports were lower at Rs 33.6 crore, as compared with Rs 43.7 crore in the same period of last year. The company has been benefited largely by the partial closure of Nalco's smelter, creating a major shortfall in domestic production. Hindalco's exports, as a result, were lower than that in the same period of last year.

The company's operating profit increased 60.6 per cent to Rs 184 crore from Rs 114 crore. The earnings per share (EPS) jumped 38.3 per cent at Rs 67.1.

Hindalco's interest charge for the first quarter increased by 30.8 per cent, while provision for taxation rose by 61 per cent. Depreciation jumped 61 per cent to Rs 29 crore from Rs 18 crore.

While metal productionincreased 27 per cent to 57,897 tonnes, alumina production increased by 19 per cent to 96,528 tonnes during the first quarter.

Addressing shareholders at the annual general meeting (AGM), chairman Kumarmangalam Birla said that plans were afoot for the company's foray into the manufacture of aluminium alloy wheels. The civil and structural work has begun and the target commissioning date is the first quarter of 1999-2000.

Birla said that internationally aluminium demand and prices have been on the decline due to the south-east Asian crisis. However, demand is expected to grow at 2.5 per cent to 3 per cent. With this rate, Birla said, production is expected to fall short of demand creating oppurtunities for aluminium companies to expand their smelting capacities.

Regarding the Rs 8,000-crore Aditya Aluminium project, Birla said that the process of evaluation and selection of technology for both the aluminium refinery and smelting operations is at present on.

For the rest of the year, the company isexpected to benefit from the recent Rs 2,500 per tonne increase in primary aluminium prices. As restoring the Nalco smelter may take a long time, domestic demand for the metal is likely outstrip production. Hence, despite low international aluminium prices, domestic prices may be raised again later this year.

INSIGHT
A creditable performance

Considering the depressed international aluminium prices, an improvement in operating profit margin from 37.74 per cent to 44.01 per cent in the first quarter is certainly impressive, to say the least. This was possible due to a fall in the value of the rupee which made imports expensive, the closure of Nalco's smelter, and higher value addition. In fact, the fall in exports was offset by higher value addition. While sales in volume terms recorded a 29 per cent jump, in value terms, the increase was of 38.41 per cent.

The stock market, however, seems to be unaware of these results. Otherwise, what else could explain the 5.5 per cent drop in stockvalue in the past three trading sessions.

Although the international aluminium prices are yet to show a long-term recovery, an additional duty of 4 per cent on imports have helped the company to raise its selling prices to Rs 73,000 per tonne. This coupled with a higher value-addition chain augur well for Hindalco.