Hindalco
Upcoming SlideShare
Loading in...5
×

Like this? Share it with your network

Share
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Be the first to comment
    Be the first to like this
No Downloads

Views

Total Views
336
On Slideshare
336
From Embeds
0
Number of Embeds
0

Actions

Shares
Downloads
5
Comments
0
Likes
0

Embeds 0

No embeds

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
    No notes for slide

Transcript

  • 1. Financial Analysis of Hindalco Industries Limited (Including Acquisition of Novelis Inc.) Group – 8, Section – B Ajeet Singh (PGP13067) Ankit joshi (PGP13070) Gurpreet Singh (PGP13089) Nikhil Kejriwal (PGP13099) Sahil Dhingra (PGP13112) Samarjyoti Das (PGP13113) Rakesh Sukumar (PGP13134)
  • 2.  Turnover of USD 14 billion, employs nearly 19500 employees  Chairman – Kumar Mangalam Birla, himself a Chartered Accountant by qualification.
  • 3. Vision To be a premium metals major, global in size and reach, excelling in everything we do, and creating value for its stakeholders The strategic acquisition of Novelis, Inc. was done keeping in view the overall vision of the conglomerate. Mission To relentlessly pursue the creation of superior shareholder value, by exceeding customer expectation profitably, unleashing employee potential, while being a responsible corporate citizen, adhering to our values. Values Integrity - Honesty in every action. Commitment - On the foundation of integrity, doing whatever it takes to deliver, as promise Passion - Missionary zeal arising out of an emotional engagement with work. Seamlessness - Thinking and working together across functional silos, hierarchy levels, businesses and geographies. Speed - Responding to stakeholders with a sense of urgency
  • 4. • Novelis is a globally positioned organization, operating in 11 countries with approximately 12,500 employees. • In 2005, the company reported net sales of US $8.4 billion and net profit of US $90 million. • In 2006 (till Q3) reported net sales of US $7.4 billion and net loss of US $170 million • Market leader in aluminium rolled products
  • 5.  Made Hindalco the largest Aluminium Rolling Company in        the world – 19% share in downstream rolled aluminium products Strategic acquisition started in Jan 2007. Rolling sheets for most car manufacturers and bottle cans Acquisition was an all-cash transaction Novelis shareholders received $44.3 per outstanding share of common stock Novelis - $6 bn enterprise value, US $2.4 bn debt All debt was transferred to Hindalco The transaction done through wholly owned subsidiary of Hindalco, AV Metals Inc.
  • 6.  Gross profit Margin = (Revenue-COGS) /Revenue = Gross Profit / Revenue  Operating Profit Margin = Operating Income / Sales Revenue = EBIT / Sales revenue  Pre-tax Margin = Income before tax / Sales Revenue  Net profit Margin = Net income / Sales Revenue
  • 7. Return on assets Return on equity ROA = Net Income Total Assets ROE = How profitable a company’s assets are in generating revenue Net Income Shareholder’s equity
  • 8. Ratio formula 2009 2010 2011 2012 2013 Return on Net 0.0054 0.0606 Assets Income/Tota l Assets 0.0283 0.0335 0.0251 Return on Net 0.0220 0.1869 Equity Income/Shar eholder Equity 0.0786 0.1010 0.0816 Return on assets increased in 2010 but then remained nearly constant. Return on Equity continuously decreased throughout the period.
  • 9. Ratio formula 2009 2010 2011 2012 2013 Gross Profit Margin Gross profit/Revenue 0.0874 0.1324 0.0986 0.3066 0.3213 Operating Profit Margin Operating Income/Reven ue -0.009 0.1017 0.0533 0.0661 0.0481 Pretax Profit Margin Income Before Tax/Revenue -0.009 0.1017 0.0533 0.0537 0.0487 Net Profit Margin Net Income/Reven ue 0.0053 0.0716 0.0340 0.0420 0.0377 Increase in Gross Profit Margin and Operating Profit Margin
  • 10. Ratios Inventory turnover Formula COGS/Average Inventory 2007-03 2008-03 2009-03 2010-03 2011-03 2012-03 2013-03 2.45 6.11 5.32 5.12 4.1 3.95 5.1 Days Of Inventory on 365/Inventory Hand(DOH or DIO) Turnover 148.98 71.57 59.74 68.56 71.27 89.05 92.48 Revenue(Credit Sales)/Average Receivables turnover Receivables 13.54 14.52 9.8 9.19 9.91 10.09 9.45 Days of Outstanding 365/Receivables Sales(DOS) turnover 26.96 25.14 37.24 39.72 36.83 36.17 38.62 6.12 6 5.5 5.72 4.66 5.27 59.68 60.83 66.35 63.83 78.27 69.3 37.03 36.15 41.92 44.27 46.95 61.8 Purchases(Credit purchases)/Average Payables Turnover trade payable 4.28 365/Payables Days Payables(DPO) Turnover 85.3 Cash Conversion Cycle DOH + DSO – DPO 90.64
  • 11.  COGS doubled from 2.45 in FY 2007 to 5.1 with acquisition of Novelis.  Days of inventory on hand has come down drastically from 148.98 to 92.48, which is a healthy sign for the company  Also, the inventory levels were high in 2007-08 due to the effect of the acquisition
  • 12.  Short term  Current Ratio = Current Assets Current Liabilities  Quick/ Acid test Ratio= Current Assets – Inventory Current Liabilities 2004 2005 Current Ratio Quick Ratio 2006 2007 2008 2009 2010 2011 2012 2013 2.5 1.78 2.02 1.97 1.25 1.19 1.29 1.29 1.63 1.69 0.68 0.47 0.6 0.59 0.49 0.55 0.49 0.49 0.56 0.69
  • 13.  Debt-equity ratio D/E ratio = Total debt Total equity  Financial Leverage Financial Leverage = Average total assets Average total equity  Debt-asset ratio D/A ratio = Total debt/Total asset 2009 2010 2011 2012 2013 debt/asset 0.439135 0.334435 0.31915 0.366138 0.411374 debt/equity 1.785702 1.030792 0.886422 1.104306 1.337505 3.480895 2.907579 2.90115 3.139474 financial leverage NA
  • 14. Debt-Equity Ratio 2 1.8 1.6 1.4 1.2 1 Ratio 0.8 0.6 0.4 0.2 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014