Replying to a question, he said, “I think even Hindalco will be paying that same type of royalty to Birla Group Holdings Private Limited.”
Pai said ownership of the Aditya Birla brand has remained with Birla Group Holdings Pvt. Ltd., which had not charged royalty for the use of the brand over the years, making it an exception among large Indian conglomerates. He said the new framework is aimed at investing in and strengthening the Aditya Birla brand for the future.
He added that Novelis had already disclosed the arrangement in its latest 10-Q filing and said Hindalco would also pay a similar royalty to Birla Group Holdings. Related-party transactions will be disclosed through stock exchange filings in line with SEBI’s Listing Obligations and Disclosure Requirements (LODR), Pai said.
During the question-and-answer session, the management said the royalty would be 0.25% of revenue, capped at ₹225 crore annually, and would not impact the company’s capital allocation or dividend policy. It added that the arrangement is expected to continue, although no specific review period was indicated.
Renewable capacity to nearly double by FY27-end
On its sustainability roadmap, Hindalco said it has 470 MW of renewable energy capacity across solar, wind and hydro projects, along with 35 MW of pumped storage tie-ups.
It expects to add another 414 MW of solar and wind capacity and 90 MW of pumped storage during the current financial year, taking its renewable portfolio to 884 MW by the end of FY27.
Downstream business recovery expected in Q2
Management said downstream aluminium volumes are expected to recover in the September quarter after a softer Q1. While downstream aluminium EBITDA reached $300 per tonne in the June quarter — a multi-quarter high — the company expects a more sustainable level of around $250 per tonne in the near term.
Over the longer term, however, EBITDA is expected to exceed $300 per tonne as the Aditya FRP plant ramps up.
The company also reiterated its target of quadrupling downstream EBITDA by FY30, with growth expected to come from aluminium downstream, aluminium specialty products and copper downstream businesses.
Separately the management said that Novelis’ long-term EBITDA guidance remains unchanged at $600 per tonne, supported by an accelerated structural cost reduction programme of $350-$400 million by the end of FY28.
The company expects Novelis’ net leverage to fall below 4x, while Hindalco India’s net debt-to-EBITDA ratio is not expected to change materially over the coming quarters as it remains in a high-capex phase.
Management also said captive coal production from the Chakla mine is expected to reach around 1 million tonnes in FY28, while the Banda mine is expected to contribute about 0.5 million tonnes from the middle of the year, supporting raw material availability and costs for the aluminium business.
Also Read: Hindalco Q1 Results: Stock gains 3% after both core businesses deliver on operating front
