Hindalco Financial Analysis
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Hindalco Financial Analysis

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  • LME = london metal exchange

Hindalco Financial Analysis Hindalco Financial Analysis Presentation Transcript

  • HINDALCO Financial Analysis 1
  • “To be successful and to be happy, the golden rule that I can think is the fact that you must follow your passion and do something that’s close to your heart.” - Mr. Kumar Mangalam Birla Chairman 2
  • 3
  • Aluminum Industry is one of the leading industries in the Indian economy. Its main operations are mining of ores, refining of the ore, casting, alloying, making into sheet, and rolling into foils. At present, Hindalco is the major producer of aluminum in the world. Aluminum industry, which is highly capital intensive and scale sensitive, depends on two major cost components viz. alumina and power. The manufacturing of 1 MT aluminium requires twice as much alumina & alumina requires 2-3MT bauxite. Thus all the companies are situated near bauxite concentrated area as its most essential component. 4
  • Hindalco Industries has a number of products to offer in categories like alumina chemicals, aluminium foil and packaging, primary aluminium, aluminium alloy wheels, aluminium extrusions, copper products, aluminum rolled products. Hindalco was among the first few alloy wheels companies to have obtained the ISO certification to meet the stringent standard of the automobile industry. Birla Copper, a unit of Hindalco is located at Dahej in Gujarat. The unit has the unique distinction of being the largest copper smelter in the world at a single location with 500,000 TPA capacity with multiple world class technologies. 5
  • Hindalco enjoyed monopoly over aluminium markets in India for more than three decades before Indian markets were opened up. Even though this liberalisation exposed the company to competition at global level, Hindalco Limited lived through both environments of protection and cutthroat competition and has emerged unscathed. Low cost production, incremental capacity additions, continuous modernization and efficient asset utilization have been the pillars of Hindalco's strategy. 6
  • Locations where Hindalco is operational 7
  • Foreign Acquisitions In May 2007, Novelis became a Hindalco subsidiary with the completion of the acquisition process for $6 billion. The transaction made Hindalco the world’s largest aluminium rolling company and one of the biggest producers of primary aluminium in Asia, as well as being India’s leading copper producer. Novelis is the world’s largest producer of rolled aluminium sheet, with operations spanning 11 countries and with nearly 11,000 employees. The company serves customers in sectors including beverage cans, automotive, consumer electronics, construction, foil and packaging. Some of its clients are Coca-Cola, Audi, BMW, GM, etc. 8
  • Financial Performance The FY 13 was one of the toughest years for non-ferrous metal industry. Globally Aluminum prices continued to remain depressed, plagued with overcapacity, inventory overhang to add to the weak sentiments for the commodities. In the Indian context, slowdown in manufacturing sector and power sector impacted demand in a low pricing (LME) scenario, the cost continued to remain high, primarily driven by high crude prices. While the prices of crude and its derivatives continued to remain globally high, depreciating rupee resulted in an additional burden. The coal prices continued to increase in India, even as the Global coal prices cooled off. 9
  • Dividends For the year ended 31st March, 2013, the Board of Directors of the Company have recommended dividend of ₹ 1.40 per share to equity shareholders aggregating to ₹ 313.60 crore including Dividend Distribution Tax of ₹ 45.56 crore. For the year ended 31st March, 2012 Company declared ₹1.55 per share to equity shareholders aggregating to ₹344.89 crore including Dividend Distribution Tax of ₹ 48.18 crores. 10
  • Board of Directors Non Executive Directors • Mr. Kumar Mangalam Birla, Chairman • Mrs. Rajashree Birla • Mr. Chaitan Manbhai Maniars • Mr. Madhukar Manilal Bhagat • Mr. Kailash Nath Bhandari • Mr. Askaran Agarwala • Mr. Narendra Jamnadas Jhaveri • Mr. Ram Charan • Mr. Jagdish Khattar • Mr. Meleveetil Damodaran 11
  • Board of Directors EXECUTIVE & MANAGING DIRECTOR • Mr. Debnarayan Bhattacharya CHIEF FINANCIAL OFFICER • Mr. Praveen Kumar Maheshwari COMPANY SECRETARY • Mr. Anil Malik AUDITORS • Singhi & Co., Kolkata COST AUDITOR • R.Nanabhoy & Co.,Mumbai NOVELIS Inc. • Mr. Debnarayan Bhattacharya, Vice Chairman • Mr. Philip Martens, President & CEO CORPORATE • Mr. Bharat Bhushan Jha Senior President (Corporate Projects & Procurement) • Mr. Vineet Kaul, (Chief People Officer) 12
  • Changes in Board of Directors In accordance with Article 146 of the Articles of Association of the Company, Mr. Kumar Mangalam Birla, Mr. Askaran Agarwala retire from office by rotation and are eligible for reappointment. Mr. Jagdish Khattar was appointed as a Director in casual vacancy caused due to demise of Mr. E.B. Desai and holds office upto the forthcoming Annual General Meeting, and is eligible for reappointment. The term of appointment of Mr. D. Bhattacharya as Managing Director expired on 30th September, 2013. This as well will be discussed in ensuing Annual General Meeting. 13
  • Coal Allocation Scam or Coalgate • It is a political scandal concerning government’s allocation of nation’s coal deposit and private companies. • The CAG ‘s argument is that the government had the authority to allocate coal blocks by a process competitive bidding but chose not to which resulted into loss ₹ 185591 crores. • This was tabled in Parliament on 27th August 2012. • Mr K. M. Birla has been charged with conspiracy and cheating to land two coal blocks in Orissa for Hindalco. • P. C. Parekh, then coal secretary, has been accused of corruption in distribution of coal license. 14
  • Awards and Recognition • Renukoot Complex wins Greentech Safety Gold Award2012 in the Mining & Metals category, for exemplary efforts towards Occupational Health and Safety, presented by Greentech Foundation, New Delhi. • Renusagar Power Division wins the Safety Innovation Award-2012, in the Power Sector category, for outstanding achievement in safety management, presented by Institute of Directors. • Hirakud Quality Circle won the Best Analysis & Process Award at the 17th All Odisha Quality Circle Convention. • The Quality Circles from Renukoot earned Six Gold Medals and one Silver Medal at the Kanpur Chapter Convention. 15
  • Aditya Birla Minerals Limited • The Company’s copper production extended by 16% mainly on account of restart of Mt Gordon mine. Sales volume is up by 14% compared to the previous year. The revenue in value terms was sustained. Profitability was adversely affected given lower realisation of copper compared to the previous year and higher average unit cost of production, because of higher volume from Mt Gordon operations at higher cost. 16