Hindalco Industries, an Aditya Birla Group company, reported a 78 per cent fall in the September quarter net profit at ₹79 crore (₹357 crore).

The company said this was due to the provision of ₹821 crore for the penalty on coal mine operations, and the fall in value of its copper mine in Australia. Net sales increased 36 per cent to ₹8,473 crore (₹6,246 crore) on the back of better realisations.

The company has made a provision of ₹563 crore for the penalty of ₹295 a tonne for extracting coal without proper lease renewal at the Talabira coal block in Odisha.

That apart, the company has set aside ₹258 crore for diminution in the carrying cost of investment in Aditya Birla Minerals, that operates a copper mine in Australia.

Forex gain

On the positive side, Hindalco registered a forex gain of ₹361 crore on ₹1,394 crore received from AV Minerals, Netherlands, a wholly-owned subsidiary. Speaking to BusinessLine , Praveen Maheshwari, CFO Hindalco Industries, said that despite constraints over sourcing coal, the company would have recorded a sharp jump in profits if not for the non-recurring provisions.

Production at the recently commissioned units is on track, with capacity utilisation touching 75-80 per cent in Utkal and 60 per cent in Mahan.

The copper treatment and refining charges have remained strong in the quarter under review, and are expected to move upward, Maheshwari said. Apart from the high provisions, the finance cost more than doubled to ₹386 crore (₹183 crore). On the possibility of prices shooting up at the e-auction of coal mines, Maheshwari said it is unlikely that companies would bid recklessly for the 204 mines being put on the block.

“It all depends on the proximity of the mine to the production unit, and cost of operating the mine. Globally, coal prices have softened, but prices in India are high due to supply shortage,’’ he said.

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