Fires at Novelis singe Hindalco profit by 45%

The Aditya Birla Group flagship reported an almost 45% drop in net profit attributable to owners at ₹2,049 crore, down from ₹3,735 crore a year earlier, and well short of the ₹4,141-crore average estimate from a Bloomberg poll.

The two fires at the Novelis plant in Oswego occurred on 16 September, 2025, and 20 November, 2025, disrupting aluminium supplies to the automotive industry and can makers. Hindalco's profit decline stemmed mainly from ₹2,610 crore in one-off expenses linked to the Oswego disruption.

Novelis accounted for 57% of Hindalco’s revenue in the December quarter. Hindalco reported a 14% jump in consolidated revenue from operations of Rs.66,521 crore on the back of higher copper and aluminium sales in the domestic market. Ebitda rose 5% to Rs.8,543 crore.

On Wednesday, Hindalco had informed exchanges that its 2026 cash flow will be hit by $1.3-1.6 billion due to the Novelis fires.

Recovery plans

The company expects to recover as much as 70-80% of the fire impact through insurance, and its hot roll mill is expected to start operations by the first quarter of FY27, Satish Pai, managing director of Hindalco, said at a media briefing.

Pai also explained that strong performance in India and higher aluminium and copper prices helped offset the impact of the disruption at the foreign subsidiary.

“If you look at this very strong India performance, which I think is going to continue strongly into Q4, this helped us mitigate to some respects the Novelis performance," Pai said.

Pai also said that Novelis' performance is expected to improve in the fourth quarter due to improved scrap spreads and cost cutting efforts. Scrap spread is the difference between the selling price of aluminium products and the cost of scrap aluminium used to make them. Novelis only uses scrap.

“We are going to put in $1 billion of equity through AV Minerals into Novelis," Pai said, adding this will help the company for the next six to eight months.

In the second quarter, Pai had guided for an equity infusion of $750 million into Novelis, to be raised as debt through its subsidiary in Holland, AV Minerals (Netherlands).

Pai reiterated that it is focused on completing the Bay Minette project in Alabama, getting Oswego back up and running. Bay Minette is the site of a new $5.5 billion low-carbon aluminum recycling and rolling plant being built by Novelis Inc. The company is planning an October commissioning of this project.

India gains offsets pressure

Moving forward, India will continue to drive growth, with some spillover impact of the Novelis incident.

“If you look at this very strong India performance, which I think is going to continue strongly into Q4," Pai said, adding "Novelis performance will improve while there will still be the impact of Oswego and once the mill starts in June from next year, you are going to see a full Novelis recovery."

Hindalco’s India business did well mainly because aluminium prices were high, said Suman Kumar, assistant vice-president for metals and mining at brokerage Philip Capital. "Since the company has its own bauxite mines fully integrated, its costs stayed steady; so, when prices went up, profits improved. Copper was not the main reason — aluminium drove the gains."

"For Novelis, the core business is fine. The loss happened because of one-time issues like the Oswego plant fire and tariff impact. If you remove those, performance was actually much better," Kumar said. Since the Oswego plant will restart in June, and capacity will increase in FY26, the management expects Novelis to improve from here and believes the worst phase is over, he added.