Commodity Online
NEW DELHI: Cost cutting is the new mantra of all corporate houses in the time of recession. As part of this, Hindalco Industries, Aditya Birla group’s flagship company, has decided to close down the Rogerstone (UK) operations of Novelis, which Hindalco acquired for $6 billion in 2007.

Falling demand was the reason the company gave for the closure. It has caused job losses of around 400 people. Rumours have it that two Novelis mills in Canada will also be closed down.

Slumping copper prices and demand had earlier forced Aditya Birla Minerals, another Hindalco subsidiary, to close its Mount Gordon copper mine at Queensland in Australia.

Company sources said the factory at Mount Gordon would continue to process stockpiles of ore and was likely to produce 1,800 tonne of copper concentrate per month for about 12 months.

Novelis’ net loss widened to $1.91 billion in 2008-09 from $117 million in 2007-08, primarily on account of $1.5 billion impairment charges and unrealised mark-to-market losses of $519 million. The company’s net sales dropped 9.5 per cent to $10.18 billion in the same period.

Hindalco is now looking for a joint debt raising programme for its greenfield projects. Analysts, however, feel that Hindalco and Novelis would be stretching the balance sheet if they draw up further fund-raising plans. The group already has a consolidated debt of $5.2 billion (about Rs 25,000 crore), of which Novelis alone accounts for $2.4 billion (about Rs 11,500 crore).