Hindustan Copper to continue inventory liquidation in Q4

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Hindustan Copper to continue inventory liquidation in Q4

Shakeel Ahmed, chairman and managing director of Hindustan Copper says inventory levels remain high despite liquidation in Q3 and the company will continue with liquidation in Q4 too to support performance.

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Hindustan Copper recorded a net profit of Rs 80.7 crore in the third quarter of FY12, a 69% jump over previous quarter, on account of higher copper prices. Net sales came in at Rs 307 crore.

The company had resorted to liquidation of inventories in Q3 that contributed significantly to revenues. Speaking to CNBC-TV18, Shakeel Ahmed, chairman and managing director of Hindustan Copper says inventory levels remain high despite liquidation in Q3. He says that the company will continue with liquidation in Q4 too to support performance.

On the fund-raising the company has been planning, Ahmed says that the preferred route remain external commercial borrowings and that the company is not looking at equity as an option now.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: Could you just walk us through the situation in terms of the inventory levels for Hindustan Copper and whether that has normalized in the quarter under way?

A: No, our inventory levels are still high. We have liquidated good amount of inventory during the last quarter which has added to our revenue. The next quarter, that means the current quarter, we hope to liquidate further and improve upon our top and bottom line.

Q: You had some unscheduled shut downs in the quarter gone by. Have all those been resolved and could you get a bit of a quarter-on-quarter volume flip because of that?

A: No, these shut downs are quiet normal in a mining company and we do factor them as far as annual performance is concerned. But it may lead to some quarter-on-quarter changes in revenue and things of that sort. We are however on course and our current quarter is expected to be substantially better than the previous year on the strength of increased inventory liquidation and stability in our alumi-copper prices as well. So we are hoping better numbers in the current quarter; the previous quarter was flat.

Q: Can you give us some sense of how much realizations have gone up in the January-March quarter?

A: Our EBITDA earning was 43% in the previous quarter and our revenue has gone up by about Rs 40 crore compared to previous year. This has led to more or less flat performance because our amortization has gone up by about Rs 12 crore in the previous quarter. That's because of higher stripping ratio in a mining company; so that amortization level will be maintained in the current quarter as well. Despite that, due to increased sales and better realizations, we are hoping that our revenue performance should improve.

Q: You had indicated that you would have some fund raising requirements. Is it still an ECB that you are keen on or would you like at some kind of equity instrument as well?

A: We are actively pursuing ECB and our preferred route is ECB only.