Indian Aluminium Ltd

• Commercial paper programme - Rs. 150 crore Rating : P1+ (reaffirmed)
• Fixed deposit programme Rating : FAAA (reaffirmed)

The ‘ FAAA’ (pronounced F triple A) rating assigned to the Fixed Deposit programme of Indian Aluminium Company Limited (Indal) has been reaffirmed. The ‘P1+’ (pronounced P one plus) rating assigned to the Rs. 1.5 Billion (Bn) Commercial Paper programme of Indal has also been reaffirmed.

The ratings continue to reflect Indal’s strong market position in the semi-fabricated (semi-fabs.) aluminium products segment; the comfortable business position of its alumina business; its conservative financing policy; and the company's improving profitability and comfortable liquidity position. The ratings also factor the competitive pressures in the semi-fabs. segment and company’s dependence on external sources for meeting a part of its metal requirements. The ratings also factor in Indal’s strong association with its parent, Alcan Aluminium Limited of Canada (Alcan) (Standard & Poor’s rated A-/ Watch Dev./A-2) and the advantages accruing to Indal therein. The ratings however, do not take into consideration the capacity enhancement projects being planned by the company, the details of which are yet to be finalised.

Indal, a subsidiary of Alcan, is the largest downstream fabricator of primary aluminium in India. The company’s operations are vertically integrated and include bauxite mining, alumina refining, power generation, primary aluminium smelting, semi-fabrication and recycling facilities. Indal is in the process of finalising capacity enhancement projects, which comprises enhancement of its smelter capacity at Hirakud along with a captive power plant and increase in its alumina refinery capacity at Belgaum. However, the nature, quantum and timing of these investments are yet to be finalised. The company’s product mix mainly consists of semi-fabricated products, which contribute to around 65% of its operating income, with alumina accounting for around 25% of its operating income. During 1998-99, the company reported post tax profits of Rs 733.7 million on an operating income of Rs. 10139.5 million.