UPDATE 1-Hindalco FY09 profit tumbles; plans share sale

* Weak demand, derivative losses hit earnings

* Plans $500 mln share sale in 6-8 weeks for expansion

* Says June qtr sales, prices better than March qtr (Adds details, quotes, share sale plan)

By Narayanan Somasundaram

MUMBAI, June 30 (Reuters) - Hindalco Industries Ltd (HALC.BO: Quote, Profile, Research) posted a 78 percent slump in 2008/09 consolidated profit on weak demand and derivative losses, but said it planned to sell shares worth up to $500 million to fund expansion.

The top Indian aluminium maker said sales and prices in the June quarter were better than in the previous three months, and believed the worst for the sector was behind it.

Hindalco, which is trebling capacity to 1.7 million tonnes by 2013 at a cost of 250 billion rupees ($5.2 billion), plans to complete the share sale in 6 to 8 weeks, finance chief S. Talukdar said.

"We have no great debt repayment for another four years," he told reporters on the sidelines of a news conference. "This is for projects."

Hindalco, which bought Canada's Novelis in 2007, has a total debt of 280 billion rupees including working capital. A bulk of the long-term loan mature in 2013 and 2014, Talukdar said.