Hindalco Industries Ltd

• Debenture programme - Rs. 100 crore Rating : AAA (reaffirmed)
• Commercial paper programme - Rs. 50 crore Rating : P1+(reaffirmed)

Crisil has reaffirmed the 'AAA' rating assigned to Hindalco Industries Ltd's Rs. 100-crore debenture programme. It has also reaffirmed the 'P1+' rating assigned to Hindalco's Rs. 50-crore commercial paper programme.

The ratings continue to reflect Hindalco's favourable and improving operating efficiency, its inherent low cost position stemming from its integrated nature of operations, its strong market position in the domestic aluminium industry and the expected sustention of the company's strong financial and liquidity position. The ratings also factor the limited risks that would arise on account of the proposed brown-field expansion project at its existing manufacturing facilities at Renukoot in Uttar Pradesh.

Hindalco, a part of the A V Birla group of companies, is the largest producer of primary aluminium in India. It is a fully integrated aluminium producer that mines bauxite, refines it into alumina, smelts alumina into aluminium and fabricates downstream aluminium products. The company also has captive power plants that meet its entire power requirements. On the product front, Hindalco sold around 46 per cent of its output in the form of value added semi-fabricated products, and these accounted for about 50 per cent of the company's revenues in 1998-99.

The company has recently shelved a large greenfield aluminium project it planned to build in Orissa and has instead decided to implement a brownfield expansion project at its existing manufacturing facilities at Renukoot. The details of this brownfield expansion project are expected to be finalised in due course of time. During 1998-99, the company reported a profit after tax of Rs. 567-crore on gross sales of Rs. 2,013 crore.