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Informist, Friday, Aug. 7, 2026

 

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--Hindalco: Aluminium demand globally remains subdued
--CONTEXT: Comments by Hindalco's management in post-earnings analyst call
--Hindalco: India aluminium demand relatively resilient
--Hindalco:India copper demand subdued Q1 on channel inventory optimisation
--Hindalco:Q1 India ops copper cast rod volume dn on tighter mkt conditions
--Hindalco: India ops upstream expansion in aluminium, copper on track
--Hindalco: See India ops aluminium downstream volume higher in Q2 vs Q1
--Hindalco: See Q2 sulphuric acid prices same as Q1 under India copper ops
--Hindalco: To take 1 yr to evaluate co's India copper mine output potential
--Hindalco:Getting pdts qualified a challenge in India copper downstream ops
--Hindalco: Getting volume growth a challenge in India copper downstream ops
--Hindalco: Cost inflation was 5% in Apr-Jun
 

 

By Rajesh Gajra and Arya S. Biju

 

MUMBAI – Hindalco Industries Ltd. will be subject to the same royalty payment terms as those announced by its US subsidiary Novelis Inc., Managing Director Satish Pai said at a post-earnings conference call with investors and analysts Friday. On Wednesday, Novelis disclosed in its June quarter financial statements filed with the US Securities and Exchange Commission that it would recognise a royalty expense under a brand license agreement with the Aditya Birla Group.

 

Novelis had said it was entering into an intellectual property license agreement with Birla Group Holdings Pvt. Ltd. towards the use of Aditya Birla Group trademarks and related intellectual property, effective Jul. 1. Under the agreement Novelis "is required to pay an annual royalty generally equal to 0.25% of consolidated net revenue, subject to specified minimum and maximum thresholds, including a limitation based on consolidated profit before tax. No royalty is payable for a fiscal year in which consolidated profit before tax is negative. For fiscal 2027, the parties have agreed that the royalty payable under the agreement will not exceed $24 million (INR 2.25 billion)." This expense will be recognised in the September quarter financials, the company had said.

 

To a question on whether Hindalco will also be paying the same type of royalty to Birla Group Holdings, Pai replied in the affirmative. The ownership of the Aditya Birla brand is with Birla Group Holdings, and the holding company "has not charged any royalty for the use of ABG (Aditya Birla Group) trademarks all these years, making it one of the exceptions among large Indian conglomerates. So, what is happening is that this brand royalty, this framework marks a transition from family-driven stewardship to structured governance," Pai said.

 

He said Hindalco's royalty payment will be covered under the company's compliance with bi-annual disclosures of related party transactions under the Securities and Exchange Board of India's listing regulations, with the next filing due in October. Replying to a question whether the brand license agreement is fixed for a certain period, Pai said he did not know exactly but expected it to be there for a while with the current terms in place. 

 

On Hindalco's India copper business, the company said there was no problem with the security of copper concentrate supply, but it was still attempting backward integration by looking for mines. "We have got one copper exploration block that we are actually evaluating and drilling holes right now, and we are expecting some more blocks to come," Pai said.

 

It will take another year for the company to evaluate the full volume potential of the mine it already has, according to Pai. "Preliminary samples are looking good, but the extent and the volumes... will probably take another year to evaluate it," he said. Apart from copper mines in India, Hindalco is looking for mines in neighbouring countries.  

 

The company reported a 16% revenue growth in the India copper segment in the June quarter, but encountered difficulty in garnering sales volume. For the quarter, Hindalco's copper metal sales fell 16% on year to 105,000 tonnes and copper continuous cast rod sales fell 8% to 96,000 tonnes. The segment's earnings before interest, tax, depreciation, and amortisation jumped up to INR 9.18 billion from INR 6.73 billion.

 

On plans to sell more downstream products in the copper segment, Pai said the company was progressing quite well in that direction. "The margins on that downstream time tend to be much higher than what we were expecting, (but) the real challenge there is getting the products qualified and the volumes going up," he said.

 

On Hindalco's strategic priorities for India operations, Pai said the company is accelerating its upstream capacity expansion in both aluminium and copper, while building a significantly strong downstream portfolio with the ambition of delivering a four-fold increase in downstream EBITDA by 2029-30 (Apr-Mar).

 

For the June quarter, the demand conditions in the India copper operations were subdued on account of "inventory optimisation by customers and a more cautious purchasing approach amid uncertainties arising from the West Asia conflict," Pai said. In the segment, the continuous cast rod sales volume declined "due to tighter market conditions," according to Pai.

 

The benefit of higher realisations in sulphuric acid, a by-product in the copper operations, that Hindalco enjoyed in the June quarter will continue in the September quarter as well, the company indicated. The sulphuric acid prices are staying elevated in the September quarter.

 

To a question whether sulphuric acid prices will taper off in the second half of FY27, Pai said, "I hope not. Because with the TCRC (copper concentrate treatment and refining charges) so low, we are counting on sulphur." Sulphur prices are impacted by the West Asia crisis and sulphuric acid prices are driven by the sulphur index, which is "pretty high right now," he said.

 

In the company's India aluminium downstream business, the sales volume growth for the June quarter was weak at just 3% on year. Pai expects aluminium downstream volume to be higher in the September quarter.

 

On cost inflation, the company said it was around 5% on a sequential basis in the June quarter and was expected on line. Pai said the company is expecting another 5-6% sequential increase in costs in the September quarter. On aluminium demand, the company said currently it is weak globally but relatively resilient in India.

 

Hindalco's consolidated net profit jumped up 75% to INR 70.13 billion for the June quarter. The company's consolidated revenue increased 32% to INR 848.25 billion. Friday, shares of Hindalco ended at INR 1,059.60 on the National Stock Exchange, up 3.2% from the previous close. End

 

Edited by Saji George Titus

 

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